Long Serving Directors and Kings Arms Yard VCT

I have commented in the past on my objections to long-serving directors on public company boards. That included comments on the directors of Baronsmead Venture Trust (BVT) only a few weeks ago – see https://tinyurl.com/talr69o , particularly the Chairman Peter Lawrence.

The UK Corporate Governance Code contains specific provisions that indicate that directors who serve for more than 9 years cannot be considered independent. Therefore companies should provide good explanations as to why they wish to ignore this provision. This is not just an issue of “box ticking”. It is about ensuring that directors do not serve for too long and become stale. In the case of investment trusts, including VCTs, this also ensures that the directors do not become too close to the fund manager which long relationships can tend to encourage.

But now we have another VCT that wants to ignore this principle – namely the Kings Arms Yard VCT (KAY) who have their AGM on the 15th June. Robin Field, the Chairman, was appointed in January 2009 – over 11 years ago, and Thomas Chambers was appointed as a director in October 2011. There are only 2 other directors so there is no majority of “independent” directors.

This is what it says in the Annual Report about Mr Field’s position: “The Board does not have a policy of limiting the tenure of any Director as the Board does not consider that a Director’s length of service reduces their ability to act independently of the Manager. As such Robin Field, who has been Chairman of the Company for more than nine years, is still considered to be an independent Director”.

I do not consider this reasonable and therefore I will be voting against the re-election of Mr Field and Mr Chambers and I suggest other shareholders do the same.

You may consider this a trivial matter when the world is suffering from the coronavirus epidemic and the IMF is forecasting that the recession will be the worst global economic contraction since the depression of the 1930s. But good corporate governance is even more essential in bad times.

Attendance at the KAY AGM in person is being strongly discouraged but there is an easy way to submit your proxy votes electronically if you are on the share register. Just go to www.investorcentre.co.uk/eproxy to do so. All you need are the reference numbers from your paper AGM notice. Registrar Computershare therefore makes it very easy to vote unlike other registrars. You don’t need to register or give away your email address.

Note the history of Kings Arms Yard VCT is that it was previously called the Spark VCT and prior to that the Quester VCT. It had a quite appalling record prior to Robin Field taking over although it took him some time to change the fund manager. It has done better since but last year was not great – a total return of only 1.8%. Poor performance in VCTs seems to be becoming more common in reports by VCTs for last year. Baronsmead Venture Trust actually had a negative return last year (to end September).

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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