“In the Directors Report DTR 5 table of notifications in the annual report, does anyone go to the trouble of telephoning the compliance departments of substantial shareholders to make sure they have notified what they are supposed to?
Our issue is that the notifications are different from our current register analysis.”
Although we do not contact substantial shareholders, to acknowledge the difference in percentage holdings between notification and current date we include the following footnote in the report of the directors under the substantial shareholder table:
“The percentages shown are based on the issued share capital at the date of notification.”
We check the latest notified shareholding, with the information from our register, and if there is a ‘notifiable’ difference, we contact the substantial shareholder in question for clarification of holding.
The obligation is on the shareholder to notify. However, we do fax or email compliance departments of substantial shareholders at annual report time to check their latest notification is still valid. This did once identify a substantial shareholder who had failed to notify that they no longer had a substantial holding. Notifications always different from register analysis due to the weird and wonderful way these holdings are calculated, and the fact that notification is only required when a 1% barrier is crossed.
Not unless there is a signigicant, unexplained difference between the number reported and the analysis produced by the broker.
We do not check , and as others have advised the broker analysis never matches the formal notifications.
However, if there were a material discrepancy, I expect we would explore why.
We did this for one major discrepancy between our records and our broker’s shareholder analysis, for our last Annual Report. This uncovered a claim by the shareholder that we had been contacted by email regarding the latest holding (this could not be traced at our end) and a fundamental misunderstanding by the shareholder as to our voting rights. The same shareholder went on to repeat all the errors a couple of months later!
This is not something we do on a regular basis. We did go to the trouble of contacting substantial shareholders to confirm their positions following a rights issue.
We have also contacted shareholders to clarify queries, for example when they have disposed of part of their business to another organisation. Once such example being when Barclays sold its global investment business to BlackRock.
We have always found it virtually impossible to agree our register analysis with the notifications we receive.
We carried out a review recently in conjunction with our brokers given that the obligation rests with the shareholder to notify. We only disclose in our annual report what has been notified so there shouldn’t be any difference. Analysis received from your broker will provide you with greater detail and the percentages may differ. Our brokers nudged where we felt a notification was tardy but we also pulled together an explaination of why % may vary and that the obligation to notify can vary depending on thresholds and the type of holding. The paper set out top 10 shareholders and we marked against which ones were required to notify and when.
There is no need to, but I think we all want our annual report to be as accurate as possible, so we initially do a sense check against the most recent cut of the share regsiter and any notifications received under DTR5 that look out of kilter with the share register, we follow up on. We accept DTR notifications by e-mail, so we would e-mail the compliance department and say we are checking data for the annual report. We usually get a response. A couple of occasions have lead to new notifications, but generally they are accurate.
Whilst we do not check the accuracy with the Compliance depts, we do check our brokers reports to ensure they are not grossly different to the notifications received. If they were we would then go back to the Compliance dept.