Northern 2 VCT AGM Report – Far From Perfect

I attended the Annual General Meeting of Northern 2 VCT (NTV) today (10/8/2022). This is a Venture Capital Trust with a decent long-term performance but last year the total return was only 0.8% after a very good prior year.

I made some negative comments two years ago about how the AGM at this company was run – I called it “totally undemocratic”, and that didn’t really change this year. This was a “hybrid” AGM in that there were a few shareholders in attendance in person but I attended via Zoom. That did allow me to ask questions but not to vote on-line which had to be done in advance.

I’ll give some very brief notes on the meeting:

There was a presentation by Peter Dines from the fund manager (now Mercia). He said net assets fell last year partly due to the fall in the share price of Music Magpie. This was put down to a reduction in the forecast margin. But note they made a large gain on that stock when it listed on AIM in an IPO. However from reading a popular blog, there seems to be some doubt about the quality of this business which more likely contributed to the 75% fall in the share price. Mr Dines covered new investments which are mainly in the software/electronic sector and also covered the exits.

The Chairman, David Gavells, then covered the pre-submitted questions. I actually specifically asked for a justification of the reappointment of F.Neale who has been on the board since 1999 and can therefore no longer be considered to be independent. This is a breach of the UK Corporate Governance Code. Mr Gavells did not answer my specific question at this point but did waffle on about board succession.

There were a few other questions pre-submitted and from those physically present, but none of great consequence.

As my pre-submitted question was not specifically answered I put it in again via the Zoom Q&A function. Mr Gavells claimed he did not waffle but just reiterated that there will be continuing changes to the board but there was no specific commitment to replace Mr Neale.  However he did get 439,000 votes against his reappointment on the proxy figures.

All the resolutions were passed on a show of hands vote of those physically present – no on-line votes permitted. This is very unsatisfactory. If a hybrid AGM is run then votes should be taken on a poll as few people are likely to be physically present.

Altogether not a particularly useful meeting with no discussion of the overall issues faced by VCTs and I suggest more thought should have been given to how a hybrid AGM is run. It is also very easy for Chairmen to duck answering specific questions in such a format.

Roger Lawson (Twitter:  )

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