Ashmore shareholders have been urged to vote against a share buyback programme that would increase the chief executive’s stake in the company above 40% and could see him gain “creeping control” of the company via the backdoor.
At the fund house’s annual general meeting (AGM) on Friday, shareholders will vote on a waiver resolution, which means Mark Coombs’ stake in the company can continue to creep up without him being forced to make a takeover bid for the company.
Last year 30.25% voted against the resolution.
Ashmore did not wish to comment on the contentious resolution.
Takeover rules would force bid
Under the Takeover Code, a shareholder whose stake exceeds 30% in a company must make a takeover bid for the company based on the highest price paid for a share in the last 12 months. Once a shareholder has exceeded a 30% stake they must make a takeover bid every time their stake in the company increases.
Coombs and his spouse currently have a 38.61% stake in the company, which would rise to 40.65% on the proposed share buyback.
In a report seen by Portfolio Adviser, proxy voting service ISS has told clients to vote against the waiver due to concerns Coombs could gain “creeping control” of the business without offering a premium to other shareholders. Pirc has reportedly also recommended shareholders vote against the resolution.
Jupiter UK Smaller Companies is the only Investment Association fund that holds Ashmore in its top 10 with a 2.1% allocation. It does not comment on other asset managers.
Ashmore board wants buyback option on the table
However, another proxy voting service Glass Lewis said it believes the the proposal is not connected with any sort of takeover attempt by Coombs.
The CEO has given shareholders assurance that following any increase in his stake he won’t propose to change company headquarters, employment or management, the London Stock Exchange listing or pension benefits.
Glass Lewis said it was concerning Coombs did not assure shareholders he has no intention to increase his shareholding above 50% but recommended voting in favour of the resolution anyway. It said it would monitor Coombs’ ownership stake.
The board has asked shareholders to vote in favour of the recommendation, stating that, like other asset managers, it has excess capital to its regulatory requirements that it wants to return to shareholders. Its last share buyback was in 2009.
It could continue to return capital to shareholders via dividends but said it wanted the full suite of options available to it.
