Equiniti ezine | April 2012

EZINE > april 2012 inside this issue: industry round-up Peter Swabey highlights key industry issues Linking up for global reach Special focus on Link Market Services vAlue-ADDED WORKPLACE ISA A new, interesting offer from Equiniti designed for enquiring minds Shareview e-mail enquiry service launched GOOD FOR SOCIETY, GOOD FOR BUSINESS How Equiniti is supporting Big Society Capital troubleshoot from the hip New edition of ICSA guide coming soon

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round-up

Peter Swabey, Company Secretary and Industry Leadership Director at Equiniti, explores some topical industry issues

Industry round-up Boiler Rooms Update

In February, we reported an increase in attempted share frauds, and we are pleased to say that this ‘boiler room’ activity seems to have abated slightly in recent weeks. This is certainly welcome, given a recent FSA press release noting that there were more reports of share fraud – or ‘boiler room’ activity – in 2011 than 2010, although fewer people have actually lost money. Indeed, while the number of attempted share frauds reported to the FSA rose by 19% in 2011 to 5,401, there was a 7% fall (from 831 to 770) in the number of people who reported that they had actually invested in the fraud – representing an estimated £1.2m saved.

This is very encouraging, as it suggests that the efforts made by the FSA, by registrars and particularly by issuers to raise awareness of share fraud issues amongst shareholders are bearing fruit. We continue to encourage clients to raise shareholder awareness and

to include the FSA/ ICSA Registrars Group warning in their mailings whenever they can.

The FSA has produced a new video in an effort to protect consumers from share fraud, which can be found online. It has also announced that it will be contacting 76,732 people whose names appear on a number of lists recovered from companies suspected of engaging in share or land purchase fraud to let them know that they are potential targets for fraudsters. The letter, which can be viewed here, also provides tips both on how to avoid becoming a victim and on what to do if you have already invested. A useful leaflet has also been produced.

For further information Please contact your Relationship Manager or Peter.Swabey@equiniti.com

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Dematerialisation

As predicted in my briefing in October last year, the European Commission has moved forward with its proposals for the regulation of Central Securities Depositories (CSDs) across Europe. A formal draft directive for consideration by the European Parliament and the Council of Ministers can be found here.

Within this document are two proposals that have significant implications for the UK market. The first is that all market trades be settled on a T+2 basis (i.e. settlement happens no later than two days after trade date) from 1st January 2015. The second is that all listed securities be traded ‘in a book-entry form through the CSD’ from 1st January 2020.

The Commission has proposed T+2 in a bid to reduce levels of counterparty risk in the pan-European market, while it believes that the trading of all securities ‘in a bookentry form through the CSD’ will improve reconciliation of shareholdings and reduce

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round-up

Theoretical cost savings tend to be more than outweighed by the costs of putting the necessary systems in place

the risk of market uncertainty. However, we at Equiniti believe the first measure misunderstands the materiality of typical transactions in markets like the UK, which has significant retail share ownership. Similarly, there is no risk of a lack of reconciliation between the number of shares in issue and the number of shares that investors believe they hold in a registered share environment like the UK, particularly when a strong regulatory structure mandates the reconciliation of underlying securities.

The practical effect of these changes for the UK market would be mandatory dematerialisation, since it is impractical for all but paper share dealing services to

offer T+2 settlement whilst still requiring paper from the shareholder in order to achieve settlement. This, in turn, will inevitably create cost of change in the UK market without any compensating benefit – whilst the principle of dematerialisation is attractive, all previous studies have identified that theoretical cost savings tend to be more than outweighed by the costs of putting the necessary systems in place, at least in the short-term. Costs and benefits will depend on the final model and there may be some beneficiaries. Nevertheless, our feeling is that these proposals are neither necessary nor appropriate for the majority of the UK market.

We understand that the UK Government has, to date, taken the line that market structural changes of this type should be left to individual member states to manage – a view shared by Equiniti. We will therefore continue to lobby both the Commission and the Government, in our own right and through the ICSA Registrars Group, and will keep you updated as matters progress.

For further information Please contact Peter.Swabey@equiniti.com

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BACS £20m cap

In our March ezine, we reported that BACS (the UK scheme for the electronic processing of financial transactions) had announced that, with effect from 31 May 2012, a new maximum limit of £20 million would be applied to any individual payment included in a file of payments, such as a dividend payment file, processed through the BACS system.

Equiniti and the other registrars have lobbied both BACS and the Bank of England, explaining that the short notice given of this proposed change would require clerical intervention with our system generated files, creating significant risk. In order to give the various payment services time to develop automated solutions for our use, it has been proposed that the effective date of implementation be deferred until later in the year. We are currently seeking agreement to this at an industry level from BACS, the Bank of England and the banks.

For further information Please contact your Relationship Manager or Peter.Swabey@equiniti.com continued on page 4

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round-up

ICSA Registrars Group Guidance Note

The Institute of Chartered Secretaries and Administrators Registrars Group (the Group) has published a guidance note on the practical issues around voting at general meetings. The Group represents UK service registrars and its members are outsourced registrars for more than 99% of the quoted companies in the UK. During recent voting seasons, we have become increasingly aware of a number of misconceptions in the market regarding how the end-to-end process of voting at general meetings should be managed. The guidance note, which Equiniti has agreed with the other registrars, is intended to remove this confusion and ensure that the market as a whole has a common understanding of how the voting process works, in time for it to be used in the run up to the majority of the 2012 AGMs. If the process is better understood, and not seen as overly complex, more participants in the investment and voting chain will be encouraged to engage in this way with the companies in whom they invest. Equally, the issues which do sometimes occur can be more easily avoided. The guidance note can be downloaded here.

For further information Please contact your Relationship Manager or Peter.Swabey@equiniti.com

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Australian Registry Services Report > on page 5

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Australian Registry Services Report

We take a look at the impressive performance of Global Share Alliance partner Link Market Services

Linking up for global reach As the modern financial services sector becomes increasingly driven by global transactions and technological progress, so the demand grows for effective, joined-up services for clients with interests around the world. It’s a challenge which last year led Equiniti to establish the Global Share Alliance (GSA), which counts amongst its global partners Link Market Services Limited (Link).

Originally forged out of Coopers & Lybrand over 50 years ago, Link has gone from strength to strength, emerging as a strong presence in the Australasian financial services market. “We have always considered ourselves to be a premium provider of financial services and in 2002 we created ‘oscar’ (online shareholder communication and registry), our own market leading registry system,” explains General Manager James Newman. “That stood us in good stead to start growing our business. From managing

the registers of 18 of the S&PASX100, we now manage 34 today. And over the last ten years our client base has increased from 185 to over 1,000 securities.”

By expanding into new territories, Link has rapidly increased its market share and now holds about 35% of the market in Australia and New Zealand, 17% in India, 18% in South Africa and 55% in Papua New Guinea.

This growth is especially impressive in the sticky Australian market. The Australian Registry Service Provider Survey 2012 – created by J.P. Morgan and Chartered Secretaries Australia – reveals that only 24% of respondents put their registry contract out to competitive tender, and less than 2% of the net Australian market has changed hands over the past three years

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due to direct competition. Link, on the other hand, is bucking that trend. “If you look at our results from 2002 to 2012, we have made a net gain of 60 clients and over 750,000 shareholders from our competitors,” says James. “When clients have decided to move their business, we’ve been a major beneficiary.”

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Australian Registry Services Report

The relationship between Link and Equiniti goes back a long way and has been reinforced by the GSA

Link also rated 62% of respondents identifying the company as actively adding value, compared to a base of 54% last year. This is an encouraging trend, since provider expertise and quality of product are the top two reasons clients cite for outsourcing. “Additionally, Link managed nine of the 10 largest Initial Public Offers in 2011, and our capital markets service and expertise has been a consistent strength over the past decade,” adds James.

Although share registration is an important part of Link’s business, today its main leadin is its technology offering, and particularly Orient Capital, which Link acquired in 2006.

“Orient provides the platform for the GSA, and operates in the UK, Republic of Ireland, Continental Europe, Asia, Australasia and South Africa,” says James. “Orient is the global leader

in investor relations and analytics, and has a particularly innovative technology platform called ‘miraqle’, an investor relations CRM with connectivity into the registry environment. Through miraqle we recently successfully completed Australia’s first ever completely paperless online IPO, as a hybrid offer for one of our large listed clients.”

James believes that the GSA provides a valuable opportunity to capitalise on growing international markets. “In Australia, we have a large mining industry that’s looking to access capital around the world,” he says.

“Recent interest has been primarily in the US, Canada, Hong Kong and, of course, the UK. We have a strong pipeline of leads. In fact, we have already signed up our first GSA client, which moved to Link in South Africa while maintaining their existing relationship with Equiniti in the UK.” He adds: “The relationship between Link and Equiniti goes back a long way and has been reinforced by the GSA. Now, we can offer a single global platform with a degree of consistency that’s not available anywhere else in the market, and utilise our skills to provide a seamless and singular offering across the globe.”

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To find out more about the GSA Contact your Relationship Manager isa > on page 7

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isa

A Workplace ISA with a wealth of valuable support is now available from Equiniti. Ian Leak explains

Value-added Workplace ISA from Equiniti As a fresh financial year swings into action, Equiniti has channelled its experience into launching a new Workplace ISA. “It seemed a natural step to make a Workplace ISA available in addition to our Corporate ISA, says Ian Leak, Head of Business Development – Investment Services. “Clients taking advantage of the Workplace ISA will enjoy the back-up of all the information and guidance available through our Contact Centre, Shareview website, and newsletters.”

Equiniti, one of the hosts of the recent UK Stock Market Awards, has highlighted recent research* that underlines the value of that support. The research into tax liabilities on Capital Gains Tax (CGT) revealed that 27% of shareholders are unaware that increases in share values are liable for CGT when sold. The Workplace ISA provides a solution for that.

The research, conducted among more than 3,500 client employees, also found that 21% of shareholders would like to know more about CGT. The tax is payable if the gain on shares, together with any other capital gains exceeds the annual exemption limit –£11,280 for the 2012/13 tax year.

In addition, the landscape of financial advice is changing in 2012, with the advent of the Retail Distribution Review. It is widely believed that this is likely to lead to a reduction in the availability of financial advisers and an increase in the cost of advice. “In this age of the Retail Distribution Review and financial DIY, having expert support on hand provides valuable peace of mind to our corporate clients, as well as to their employees and shareholders,” adds Ian. Following the decision of another provider to pull out of the Corporate ISA market, Equiniti

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has been offering a solution to former clients– the biggest example to date being Royal Dutch Shell. “Our experience in the market enables us to provide a lot of bespoke advice to new clients,” says Ian. * Employee research in a FTSE 100 Company, 2012.

To find out more about the Equiniti Workplace ISA Please contact Ian Leak on 07736 359242 shareview > on page 8

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Shareview

The addition of an e-mail enquiry service to the Shareview site opens up more possibilities both for Equiniti’s clients and their shareholders

Designed for enquiring minds Continually reviewing and exploring ways to improve its service offering is an integral part of Equiniti’s philosophy. We are therefore very pleased to announce a significant enhancement to our Shareview site.

The site is custom built to provide a simple and secure means for shareholders to manage their share portfolio online, whilst also providing market information, news on developments in the world of finance, and advice on available products and services.

Now, the site’s ‘help’ section has been enhanced to further improve user experience by offering more detailed guidance and an e-mail enquiry facility.

Enabling shareholders to easily access information has long been a priority for Equiniti. For example, continuous improvement in our Contact Centre, has seen record levels of customer satisfaction. Yet the complex nature of shareholder enquiries

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Shareview means that the telephone may not always be the most appropriate means of contact. The new, enhanced ‘help’ section of the Shareview website has therefore been developed.

Shareholders have been given greater choice as to how they can contact us and can now find out easily how best to get in touch with regards to particular requests.

“Our aim is to give shareholders as much information as possible,” explains Fiona De Antonis, Operational Development Project Manager at Equiniti.

“The Contact Centre continues to be available and provides an excellent service.

However, some shareholder requests, such as change of name, will require supporting documentation, while others may require external guided help, from HMRC for example.

What we’ve done, therefore, is to provide information pages for each of the main shareholder requests. Within each of these pages, clear and comprehensive advice on what shareholders need to do to address specific queries is given.”

Fiona adds: “More than a straightforward FAQ section, it’s a comprehensive online resource, with external links and information on forms to download. By providing this

information up front, we should find that some shareholders are able to skip one or two steps of what would be a usual customer journey. In addition to this, the number of requests being referred back to the shareholder will be greatly reduced.” Getting it right first time makes for happier customers and efficiencies will be experienced all round.

Detailed information of this kind empowers the shareholder by giving them a greater understanding of the requirements.

It gives them the whole picture rather than part of it. This is particularly important for some of the more complex share registration transactions.

One important enhancement is the addition of an e-mail enquiry service that enables shareholders to e-mail the Equiniti customer service team directly and, most importantly, securely.

While the benefits of the improvements are obvious for shareholders – saving them time by providing better guidance and offering more possibilities around how to submit enquiries – the introduction of secure e-mail enquiries is good news for clients, too.

“With the e-mail enquiry facility, shareholders’ personal information and the

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nature of their request is input directly into our work flow system. This means that the Operational teams, including the Contact Centre, can see a request coming in, track it, and see what response has been issued and how,” Fiona explains. “It gives us enhanced management information, which we can share with clients. To sum up: it’s auditable, it’s secure and it’s user-friendly.”

The enhanced site went live to shareholders in the late afternoon on 15 March, with the first enquiries logged within seconds. “That was great to see because it proves that people are using the Shareview site and that they’re using this route to raise questions,” Fiona adds.

For more information on the Shareview e-mail enquiry service Please contact your Relationship Manager. big society capital > on page 10

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Big Society Capital

Big Society Capital is leading the charge into the field of social investment – with the help of Equiniti.

We find out more from Chief Operating Officer Caroline Mason

Good for society, good for business Q Tell us about Big Society Capital?

Why were you established and what are your aims?

We’re an independent financial A institution, authorised and regulated by the Financial Services Authority, launched on 4th April 2012. Our aim, in very broad terms, is to grow the social investment market in the UK, and we do this by capitalising what are known as Social Investment Finance Intermediaries (SIFIs). These are organisations such as social banks and social funds, which deliver appropriate and affordable investment straight to the front line. So we’re really about attracting capital to increase the flow of social investment capital from the top down.

Q How would you define social

investment?

Social investment essentially means A investment intended to deliver a social as well as financial return – so an organisation

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Big Society capital

It allows us to concentrate on our core activities, with peace of mind

benefiting from social investment will have social goals embedded in its business model, as well as operating a revenue model with which it can repay investment capital.

Examples include charities, social enterprises, voluntary and community organisations, cooperatives and mutuals. I guess you could call it ‘good business’. It’s a growing sector in the UK, but at the moment it suffers from a lack of access to capital.

Q How are you funded?

We have two main funding streams.

A The first is from the dormant accounts –

the 2008 Dormant Accounts Act created a voluntary scheme through which banks and building societies can transfer money that has been lying untouched for decades in dormant

accounts. Based on current reclaim rates, we expect to receive up to £400m from that fund in the next four to five years. Our second funding stream is the four major banks: Barclays, HSBC, Lloyds Banking Group and RBS, which are investing £50m each in equity.

Between those two, we will be capitalized up to £600m. Because money flows into us every quarter, we effectively have to issue new shares on a quarterly basis. And that’s taken care of by Equiniti, who is our share registrar.

Q What was it that made you choose

Equiniti as your partner?

It was really the quality of its customer A service. We contacted four registry services and Equiniti offered to come to meet us, sit down with us, and to really try to understand what we want to achieve and why. Its service offering was absolutely brilliant right from the start, and that really marked Equiniti out.

Q As well as Equiniti acting as your

share registrars, David Venus is carrying out company secretary work for you. How do they both add value to you as an organisation?

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Our key focus is on investing money for

A social benefit and to grow the social

investment market. To be able to partner with an organisation that is so professional and so capable at taking care of things that aren’t core for us – but which are nevertheless critically important – is a huge benefit. It allows us to concentrate on our core activities, with peace of mind. The quarterly shares function in particular is relatively unusual – if it went wrong it could cause all sorts of issues for our reputation and how we’re able to function – so Equiniti’s experience and expertise is invaluable.

Because we deal with the Government and big banks, we also come under a lot of scrutiny, and it is a cornerstone of our ethos to be completely transparent. Equiniti has been extremely helpful, responsive and thorough throughout, and that has helped everything go very smoothly for us.

To find out more about social investment Please e-mail Caroline Mason at cmason@bigsocietycapital.com troubleshooting > on page 12

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troubleshooting

Pick up your new copy of ICSA’s seminal guide for company secretaries

Troubleshoot from the hip A fully updated and extended edition of the best-selling The ICSA Company Secretary’s Troubleshooter will be published next month.

Written by David Venus & Company Director Susan Wallace, the bestselling guide offers quick access to information and ready answers to the many questions that company secretaries may encounter in their day-to-day work, in clear and concise language.

Now with more case studies and new Q&As, this third edition also contains a new chapter on corporate governance and related legislation, including the Bribery Act, the Takeover Code, ABI guidelines, the UK Corporate Governance Code, and competition law. The book also provides extensive cross references point to relevant codes, documents

and sources of further information, while a ‘Useful Information’ section provides instant access to key information and guidance.

Priced at £55.00, The ICSA Company Secretary’s Troubleshooter will be available in both print and ebook formats from May 2012 onwards.

To order your copy Visit www.icsabookshop.co.uk

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