I attended the Northern 2 VCT Annual General Meeting yesterday via Zoom. This was a most disappointing event.
There were three directors physically present and Tim Levett gave an overview of the company’s new investments and the top ten holdings. But when it came to the formal business they took a show of hands vote which is totally meaningless when only the directors were permitted to be present.
They did show the proxy counts, so they may have won a poll vote anyway but that is not the point. It should have been a poll vote.
The Chairman did suggest they would answer questions submitted prior to the event, but they did not specifically respond to the comments I submitted in advance. These were:
A – There are too many directors on the board who have served for more for more than 9 years. Too long! [in fact there are three out of five with more than 9 years which is contrary to the UK Corporate Governance Code unless reasons are given. They did refer to the AIC Code but I do not accept that this should be used and it is simply not good enough for other directors to simply say they consider them independent. Is length of service a problem? I certainly think so. One only has to consider the recent case of Wirecard where the 75-year-old Mr Matthias had been Chairman for more than a decade until recently. Would such a massive fraud have taken place if the board had been regularly revived? In investment trusts it is particularly problematic as the directors can build very close and inappropriate relationships with the fund managers].
B – There is no clear statement of total return for the year in the Annual Report, and percentage change over the prior year). [There was no reference to this at all by the directors, but on my calculation it was -3.9% last year. That’s actually better than some other VCTs. Many VCTs had to mark down the valuations of some of their early stage businesses, but as the results were only to the end of March, there may be worse news to come].
Despite the use of Zoom, there was no interaction with the audience whatsoever with no opportunity to ask supplementary questions. I have no idea even how many shareholders attended.
A quite disappointing event and not how to run an AGM even bearing in mind the current restrictions.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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