The tussle between the Royal Bank of Scotland (RBS) and retail shareholders over requests for the creation of a shareholder committee could take another step, with reports suggesting that legal action could be considered.
In February RBS rejected calls for the creation of a shareholder committee from shareowner bodies ShareSoc and the UK Shareholders’ Association.
But the Financial Times reports that the two bodies may consider legal action, after being told they could not see the advice to RBS from lawyers on the issue and that it was legally privileged. The campaigners say that the advice is not privileged.
A consultation green paper from the UK government last year proposed the creation of shareholder committees, but they are not currently in use.
When RBS turned down demands for a committee in February, ShareSoc responded angrily, calling it an “unreasonable obstruction of shareholder democracy”.
At the time, ShareSoc chairman Mark Northway said in a statement: “It is disappointing that, instead of leading from the front on corporate governance, RBS have instead chosen to try to thwart this initiative.
“This behaviour by the directors of a company that is majority owned by the UK government underlines the broad reticence of UK boards to address the breakdown of the agency model and the rights of shareholders.”
In the Financial Times report, MP Chris Philp, a member of the House of Commons Treasury committee, described RBS’s rejection “outrageous”.
Last year, Philp—a Conservative MP—wrote a report published by the High Pay Centre, calling for shareholder committees among a a number of other corporate governance reforms.
In the report, called Restoring Responsible Ownership, Philp wrote that shareholder committees would “re-empower shareholders and makes boards more accountable. It will help end the ownerless company.”