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Getting your fair share

14 March 2022 Sector Insights, About Alliance Trust Alliance Trust

There can be so many things to remember in life that it’s not surprising that assets get lost through the generations. It can be incredibly easy to lose track of investments, for example, by forgetting to update your address after moving home or not keeping a proper record of shares you have bought or sold.

It is not just sharing of course that one can lose track of; people also forget about or can’t find pensions, life insurance policies and bank accounts.

When there has been no activity on accounts, policies or shareholdings, financial companies which provide those services do have a responsibility to try and find the owners.

When it comes to shares lost assets information site Unclaimed Assets UK cites that around £3 bn is estimated to be owed to UK investors from unclaimed shares and dividends.

‘A wave of corporate mergers, acquisitions, restructurings, share spin-offs and name changes has dramatically increased the amount of lost securities,’ it says. ‘On average, between 2% and 5% of a company’s shareholders have either moved from the address to which the company sends correspondence, or have died.’

It adds that Companies House regulations stipulate that shares may not be cancelled if a holder cannot be traced, shares belong to the registered holder or rightful heir. ‘Stockholders in companies that merged or were acquired may also be entitled to collect spin-off shares, cash distributions or dividends from the restructuring, even if shares were sold long ago.’

Companies can however hold onto any dividends which are unclaimed, usually after 12 years.

For investors searching for their own shares the three main registrars to apply to for assistance in the UK are Capita, Equiniti and Computer Share.

But very often shares are lost without the owner or the beneficiaries of an owner’s estate remembering or knowing anything about them. And very often also it is the company whose shares have been lost that attempt to find the owners.

Alliance Trust recently updated identified 90 ‘gone-away’ shareholders to be traced, between them, owning about £1 million in shares and uncashed dividends totalling over £200,000. The largest holding comprised 10,000 shares, and the longest-dormant account went back to 1998.

Previous exercises to identify lost shares and find the owners had a gathered 291 names, (including the 90 mentioned above), had involved using an external company which tracked down and repatriating 170 shareholders with their shares and dividends, with another 51 identified but still to finalise their claims.

And then Ian Anderson, commercial and corporate governance manager at Alliance Trust, put his detective hat on and went to work finding shareholders himself. He began with the largest shareholdings and made online searches of publicly available resources such as death registrations, which in some cases led to wills available in the probate registry, and in turn to the names of executors and solicitors involved in the winding-up of the estate.Some searches proved pretty straightforward.

“LinkedIn was a good way of making contact with people by telephone, or by email where an email address could be found,” said Anderson. “This also allowed the individuals I contacted, the information that they needed to check that my contact was bona fide and not some form of phishing scam."

“For example, one shareholder had a very distinctive name which came up quickly from a simple Google search followed up by a LinkedIn contact, so that took maybe half an hour at most.”

This gave the shareholder a windfall of nearly £2,000 in past dividends.

But on other occasions he found himself having to think very laterally. Tracking down the identity of one long-dead shareholder involved working out where she had lived many years ago and talking to the current owners, who remembered her as a previous occupier. Another, which has not been successful to date, involved him contacting several firms of solicitors to try to find someone with knowledge of the deceased.

“That has probably taken a number of hours,” he admits, but he makes the point that given the considerable value of the unclaimed shares and dividends, it’s important the Company takes all practicable steps to find the owners.

“We will now use a professional database search tool on those shareholders that we have not managed to contact and follow up with letters or telephone calls where we think we have found someone,” he adds.

Reuniting lost shareholders with their shares

As well as this very proactive approach to reuniting dormant shareholders with their lost Alliance Trust shares and the dividends they might otherwise have forgone Alliance Trust has extended this exercise to include those who did not receive dividends for more than 12 years and those who have merely not kept their details up to date.

In 2021, over £0.7m of shares were reunited with their owners together with around £50,000 of dividends which would have been liable to forfeiture or which had been returned to the Company after not being claimed for 12 years.

In addition, shareholders have been able to claim the dividends that were being held by the Registrar until the shareholder updated their details. Shareholders who have been contacted by the Company includes a shareholder who has 40,000 shares and over £40,000 of dividends to be paid as well as shareholders holding only a few hundred pounds of shares.

In 2021, £49,000 was returned to the Company for dividends that have been unclaimed for more than 12 years which is reinvested in the portfolio.

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