How shareholders can vote to defeat Wall Street raider as US hedge fund targets seven UK investment trusts

The £1.2bn Herald Investment Trust will tomorrow be the first of seven trusts targeted by US raider Saba Capital to face a vote on whether to sack its entire board and replace them with the hedge fund’s nominees.

The other trusts targeted are Baillie Gifford US Growth, Edinburgh Worldwide, European Smaller Companies, Keystone Positive Change, CQS Natural Resources and Henderson Opportunities.

Fears are growing in the industry that a low turnout among private investors who own shares in the trusts will hand victory to Saba.

While Saba has stakes in each company ranging from 19 to 29 percent, the trusts also have a large number of retail investors whose votes will prove crucial in deciding the outcome.

The American company needs to obtain at least 50 percent support from voting shareholders to be successful. As a result, you will win if other investors do not actively vote against your proposals.

This way, investors will be able to vote on Saba’s plans at upcoming meetings.

I vote by proxy

Investors do not have to attend meetings in person and can instead use proxy voting, in which another person votes on their behalf.

But they should be sure to complete the forms required for proxy voting before the deadline prior to the vote itself.

For some of the trusts, the notice period deadline may fall up to a week before the meeting, so investors attempting proxy voting should check directly with the trusts and monitor any announcements.

For example, Edinburgh Worldwide Investment Trust announced yesterday that shareholders must submit their voting intentions by 11.45am on 12 February for them to be counted.

Voting through investment platforms

Many investors hold their shares in trusts through investment platforms that use nominee accounts that allow them to cast votes collectively or individually.

Big platforms such as AJ Bell You Invest, Hargreaves Lansdown and Interactive Investor allow investors to vote with shares held through their accounts at no cost, according to guidance from industry body the Association of Investment Companies (AIC).

However, some platforms have deadlines for submitting voting instructions that may even be earlier than the trusts’ own deadlines, meaning that investors should submit their voting instructions to the platforms as soon as possible.

The platforms have been looking for individual investors to vote on Saba Capital’s proposals, which can be done through their websites.

Shareholders who own any of the affected trusts should pay attention to the correspondence or go to the platform’s websites to find out how to vote.

Those who own shares through investment platforms should check their emails, their inbox on the platform, or contact the platform directly for more information.

Shareholders should note that not all platforms automatically inform investors about upcoming votes in companies in which they invest, so some users may need to opt-in to receive information and instructions on how to vote.

It is also important for investors who hold shares in different accounts, such as in an ISA or a self-invested personal pension (SIPP), to ensure that all their shares will be used to vote on the platform through which they are held.

Attend meetings in person

Shareholders of investment trusts have the right to attend meetings and vote on what happens with the companies in which they have a stake.

However, it is important to note that attending in person does not mean that a shareholder can miss the deadline to submit voting instructions prior to the meeting date.

Investment trusts must communicate directly with those who hold share certificates to notify them of events and votes, and explain what to do and how to attend a meeting.