Smaller thorn

15 January 2008 By Mike Verdin

The dissident shareholders who called EGM can claim some success. Their resolution putting a tighter cap on new share issues passed. But three others failed. Shareholders look less capable of resisting government pressure. Investors are cutting their estimates of terminal value.

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An extraordinary general meeting of Northern Rock shareholders backed by 66% to 34% a resolution by two hedge funds, RAB Capital and SRM Global, to limit the bank's scope for issuing new shares. The resolution, which required a simple majority, will cut to £5m the nominal value of Rock shares the board can issue without shareholders' approval.

Three other proposals by the hedge funds for limiting the board's powers failed to achieve the 75% majority required.

Investors backed the appointment of five board members, including chairman Bryan Sanderson and chief executive Andy Kuipers, by more than 90%.

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