To: SmartLogik Action Group

Please support the UK Shareholders' Association (see their e-mail
below), so that we can help to shape the Company Law Reform Bill now
passing through Parliament. In particular, the VOTING RIGHTS OF
SHAREHOLDERS IN NOMINEE ACCOUNTS.

As you know, SmartLogik shareholders were disenfranchised by the
"waiver" that was arranged with the UK Listing Authority in April
2002. And, although some progress has been made, we have found it
extremely difficult to contact the thousands of SmartLogik
shareholders in nominee accounts.

David Blundell, Chairman of UK Shareholders' Association, says the
following:

"I cannot emphasise too much how important it is that we get some
changes made to the Company Law Reform Bill, as otherwise it is likely
to be many years before this issue is revisited. You can personally
help by writing to your MP, and to anyone you know who sits in the
House of Lords, on this issue."

Please see below for full details, where they also have given a
suggested format of the letter to send to your MP.



Regards,



Justin Jones
For SmartLogik Action Group

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From: Toby Keynes [mailto:toby.keynes2@...]
Sent: 24 November 2005 12:28
To: membership@...
Subject: UKSA: Shareholders' Rights Campaign


To all UKSA Members




UKSA Criticises the Company Law Reform Bill and Asks for Your Support
to Strengthen the Provisions on Shareholder Enfranchisement

The new Company Law Reform Bill has recently been introduced into the
House of Lords. The UK Shareholders Association welcomes many
provisions of the Bill but feel that the provisions for the
enfranchisement of nominee shareholders are totally inadequate.

The UK Shareholders Association originally expressed support for the
proposals on shareholder rights for nominee accounts as outlined by
the European Securities Forum (ESF) and supported by the Company Law
Reform White Paper. It has clearly been a major concern of our members
that shareholders in nominee accounts are generally ill informed, and
lose the basic rights enjoyed by shareholders whose names are on the
share register. But it is now clear to us that without more vigorous
Government intervention in this matter, no satisfactory solution is
likely to appear and the provisions of the Company Law Reform Bill are
simply not strong enough. Here's a chance for you to support UKSA and
we are asking you to write to your Member of Parliament on this
subject.

Unfortunately with PEP and ISA holders being forced to use nominee
accounts, and stockbrokers and issuers generally promoting such
nominee accounts for new shareholders, many private shareholders have
lost their basic rights, and the new Bill is not going to solve this
problem in a comprehensive way.

What We May Get

The solution that has been developed and is supported by the new Bill
has the following primary features:

A – Companies may amend their Articles to support governance (e.g.
voting rights), but this is optional, and it seems quite likely that
many if not most, will not do so.

B – It is not even clear whether companies will have an
obligation to
provide information such as the Annual Reports & Accounts in
electronic form as this requirement is only embodied in a reserve
power of the Government in the new Bill. There is no commitment to use
this power at all, and it does not even provide a right enforceable in
law by shareholders.

C – The Company Law Reform Bill proposes that companies can choose
which rights they actually offer such indirect shareholders, so that
some companies might chose to offer just information, others may offer
voting rights but not rights such as the ability to call for an EGM,
while yet others might offer full rights. It is up to the companies to
choose which rights, if any, they give beneficial shareholders by
changes to their Articles.

D – In addition, it will be optional for brokers and/or other
operators of nominee accounts to support the Companies in the
provision of such rights to their beneficial shareholders. Indeed only
certain brokers seem to have much interest in this, while other
brokers suggest they already have adequate facilities, for which there
is no demand anyway. However, it is clear that any brokers offering
such facilities will be likely to make some extra charge to cover
their own additional costs of providing such information or supporting
voting systems.

In summary we have a proposed system which is probably going to have
little take-up by brokers, is unenthusiastically supported by
companies and in which registrars have no interest (except to minimise
their own expenditure of effort in supporting the system).

Perhaps it's not surprising there has been no unanimity on how it
should operate!

In addition, brokers expect to incur costs in implementing any
solution which they will pass on to the shareholders, instead of the
issuers taking on that liability in full. This will discourage take-up
of the facility by brokers' customers.

Exercising Voting Rights

One proposal that has been made is that the exercising of voting
rights should continue to be handled by nominee account operators (eg.
stockbrokers), who would aggregate their beneficial holders'
instructions. In reality, separating the flow of information from the
company to the investor, from the return of voting instructions seems
odd to say the least, and will lead to enormous practical
difficulties, as it does at present for those brokers who attempt to
support such a system. Will all beneficial shareholders know when to
vote, and what they might be voting about? Will brokers actually pass
on the required voting instructions to their clients in a timely and
reliable manner?

Shareholders Will Not Be Clear on their Rights

Because different companies may or may not enfranchise shareholders,
and may indeed provide different levels of support for various rights,
and brokers might also offer different levels of support, it will be
totally confusing as to what rights an indirect shareholder might
receive. Is a shareholder, who might have many shares in his
portfolio, really expected to keep track of what rights he might or
might not have in each? As a registered shareholder you always know
what you should be receiving, and can easily double check for any
missing notice of a General Meeting. But that will not be the case for
indirect shareholders. In essence, the proposed system will simply be
a mess.

Compare that with the US system where all indirect shareholders
receive all information from all their investments as a matter of
right, and also receive any required proxy voting forms in the same
way. In essence, a simple yet comprehensive system that operates in
the best interest of shareholders rather than the industry service
providers and the issuing companies.

Note that we are not proposing that shareholders be enfranchised or
receive information if they don't want to do so. Beneficial
shareholders would be able to opt out if they wished - this might
apply for example to those shareholders whose holdings are managed on
a discretionary basis.

Over Complex and Impractical Solutions Instead of a Simple Principle

Unfortunately no agreement has been reached on how to enfranchise
shareholders and most of the proposals have been complex to implement
and not comprehensive. Indeed what we suggested in our comments on the
Company Law Reform White Paper were "We are not clear why the chosen
route towards enfranchisement is the complicated one of (partially)
enabling nominees to assign `all or any specified rights', instead of
the more direct route of legislating that the beneficial holders
through the nominee accounts of registered brokers are ipso facto
enfranchised, with all the rights of an on-the-register shareholder".

We see no reason why such indirect shareholders should not simply be
recorded on the share register as additional members in the same way
as "designated" nominees are, and it does not seem to us to be beyond
the capabilities of modern technology to support such a system at no
significant additional cost.

But clearly one difficulty is the lack of any enforcement or
encouragement in the Company Law Reform Bill to persuade brokers and
issuers to participate in such a scheme. The proposed changes to
Company Law, which appear to have been designed purely to facilitate
an agreed industry or market-based solution, will in practice not be
sufficient with the existing attitudes of industry participants to
effect any substantial change and ensure most indirect shareholders
are enfranchised in a reasonable time frame.

How You Can Support the UKSA Campaign

I cannot emphasise too much how important it is that we get some
changes made to the Company Law Reform Bill, as otherwise it is likely
to be many years before this issue is revisited. You can personally
help by writing to your MP, and to anyone you know who sits in the
House of Lords, on this issue.

A suggested letter you might use as a template follows, but please use
your own words and rewrite it if possible so as to avoid it looking
like a straight copy. Please do this today as it is urgent to bring
this to the attention of politicians!



Yours sincerely


David Blundell, Chairman

UK Shareholders Association

BM UKSA

London

WC1N 3XX


Phone: 0870-70-60-600

Email: uksa@...

Web: www.uksa.org.uk



Note: More information on this issue and copies of this letter in
digital format are present on our web site at
www.uksa.org.uk/Company_Law.htm , or call the main UKSA number above
if you have any questions. If you do not know who your MP is then
either call UKSA or go to the following web site:
www.locata.co.uk/commons
__________________________________________________
______________________________\
__________________________________________________
_____________________________

To: _________________________

Member of Parliament

The House of Commons

London

SW1 0AA


Dear Mr _______________,

As you may be aware, the new Company Law Reform Bill has recently been
introduced into Parliament. Although there are many good aspects of
this bill, I would like to bring to your attention a major deficiency
in this proposed legislation. Namely that it will not enfranchise
those shareholders who hold their shares in nominee accounts.

Although the previous White Paper referred to the extension of
"governance rights" to indirect investors in companies, and the "right
to information", in practice what we are likely to get as a result of
the Bill is a system that will be optional for companies, optional for
nominee account operators (e.g. brokers) and complex to understand for
shareholders.

Instead of a clear commitment by the Government to enforce proper
legal rights for beneficial shareholders at best we have a weak
commitment at the whim of the Secretary of State to get just
information supplied to such shareholders. There is no commitment to
ensure voting or other rights, and the lack of a Government lead to
the financial industry will result in a patchy, half-hearted system at
best. Compare that with other jurisdictions such as the USA where all
shareholders have the same rights as a matter of law.

Note that I am a member of the UK Shareholders Association, who
represent the interests of private shareholders, and more information
on this subject is available on their web site at:

www.uksa.org.uk/Company_Law.htm.

Could I ask you to look into this matter, and take up the issue with
the relevant people in the Government and in your own party, as it is
surely of major concern to those millions of people who hold company
shares, particularly those with PEPs and ISAs who are forced into
nominee accounts by the Government's own rules.



Yours sincerely



_________________________