But as a rider to the above, I actually bought a few more Aviva AV.B.88V8 wrote:....I sold most of my Prefs at the beginning of December.
I don't believe they will pay silly Bs now, although 2026 is five years hence, who knows.
V8
But as a rider to the above, I actually bought a few more Aviva AV.B.88V8 wrote:....I sold most of my Prefs at the beginning of December.
John, did you ever raise this issue with the FCA?johnhemming wrote:Its a good issue to raise with the FCA. Logically withdrawal at par would be thought to not be appropriate. Hence they may need to offer improved terms as did Lloyds some time ago.
I did raise it with the FCA and got a useless response so I sent another letter being more specific.ElectronicFur wrote:John, did you ever raise this issue with the FCA?
Yes they thought it was pertinent because they immediately in the very next sentence made it very clear for all the Fools here who still think the shares cannot be repaid:ElectronicFur wrote:John, did you ever raise this issue with the FCA?johnhemming wrote:Its a good issue to raise with the FCA. Logically withdrawal at par would be thought to not be appropriate. Hence they may need to offer improved terms as did Lloyds some time ago.
I did email them for clarification about their Aviva censure. The FCA in it's censure press release on the 26th of October particularly drew attention to the fact the preference shares had been described as irredeemable at the time of issue.
So clearly they thought it pertinent to mention the fact they were described as irredeemable.
******* DELETED **********GoSeigen wrote:Yes they thought it was pertinent because they immediately in the very next sentence made it very clear for all the Fools here who still think the shares cannot be repaid:
The press release did not say that actually. You are quoting from the Final Notice, not the Press Release.Yes they thought it was pertinent because they immediately in the very next sentence made it very clear for all the Fools here who still think the shares cannot be repaid
GoSeigen wrote:........they immediately in the very next sentence made it very clear for all the Fools here who still think the shares cannot be repaid:
Para 4.3 [...] Nevertheless (due to the terms under which the shares were issued and section 641 of the Companies Act 2006) Aviva has the ability to cancel the shares at par....
And whether they can (outside insolvency) varies from instrument to instrument. Hence there is a good reason for there to be certainty to distinguish between the securities which require a class vote and those that do not.88V8 wrote:And I am sure that a significant percentage of investors and indeed quite a few market professionals, would still think that they cannot forcibly be repaid.
So I am! Nice to be in the company of such alert readers!ElectronicFur wrote:The press release did not say that actually. You are quoting from the Final Notice, not the Press Release.Yes they thought it was pertinent because they immediately in the very next sentence made it very clear for all the Fools here who still think the shares cannot be repaid
1. You invest in a company, you are subject to Company Law. Your own loss if you don't care about the law.88V8 wrote:it should not be necessary to plough through yards of verbiage and the Companies Act to learn that an Irredeemable security isn't.
'GoSeigen wrote:1. You invest in a company, you are subject to Company Law. Your own loss if you don't care about the law.88V8 wrote:it should not be necessary to plough through yards of verbiage and the Companies Act to learn that an Irredeemable security isn't.
2. Yes an irredeemable UK share (not security) isn't redeemable. No one has ever disputed that. Discussion and misunderstanding has been about capital reduction, not redemption.
GS
Well actually there are two other ways it can be bought back (excluding winding up):Dod101 wrote:'GoSeigen wrote: 1. You invest in a company, you are subject to Company Law. Your own loss if you don't care about the law.
2. Yes an irredeemable UK share (not security) isn't redeemable. No one has ever disputed that. Discussion and misunderstanding has been about capital reduction, not redemption.
GS
When a share is irredeemable that means it is not redeemable at the option of the issuer, but, just like any other asset, it can be redeemed (bought back) if both parties agree both the sale in principle and the price at which the transaction will take place. How could it be otherwise? It does not need the FCA to tell us that. Everything is for sale if the price is right.
Dod
But surely what seems to have been established is that they do not/did not have the option simply to cancel at par. If GS is correct, and I would say it sounds as if he is, then cancelling them at par could only be seen as a capital reduction and would need the sanction of the Courts. Holders of these Prefs might well see that as unfair if the Courts agreed, but a lot in life is seen as unfair by different parties, depending on they stand in the matter. The honourable thing to have done would have been to set a price at which to buy them, probably somewhere above the then market price and put the proposal to a meeting of the shareholders to try to gain their approval.ElectronicFur wrote:I don't see why some of you are so opposed to the regulator clarifying the issue, or why some of you seek to somehow blame investors for not being aware of the issue.
Especially when even the issuer was not aware until 2017. Aviva disclosed to the FCA it only discovered in 2017, after obtaining third-party legal advice, that the legal ability to cancel at par was available to it due to the Companies Act 2006. Even after discovering this and having examined the options in detail, Aviva disclosed it's board was divided, the CEO stated there was less consensus on this issue than on any other in five years.
Just because something is legally possible does not mean that it will be deemed to be fair, and legally there is legislation giving the regulator powers to act to ensure fairness and clearness.
Aviva knew the preference shares were marketed as irredeemable and even perpetual. Aviva disclosed that it considered in detail the reputational risk that might arise from cancelling at par, which I think illustrates it was aware that it's actions might be viewed as unfair. It disclosed it considered whether knowing about the ability to cancel at par was possession of inside information. It also disclosed it did detailed work on how the court might view the option, and was worried about the litigation risk, which illustrates it was uncertain from the outset how it's actions might be viewed by investors and the court.
The above is why I think the regulator needs to provide further clarity, and why I wrote to them.
I sent another letter to the regulator more recently saying clarity was needed. With all the uncertainty about the legal position of class votes and whether this aspect of EU law has force or not clarity is needed.ElectronicFur wrote:The above is why I think the regulator needs to provide further clarity, and why I wrote to them.
It would help if you read their report first, which makes clear their position.johnhemming wrote:I sent another letter to the regulator more recently saying clarity was needed. With all the uncertainty about the legal position of class votes and whether this aspect of EU law has force or not clarity is needed.ElectronicFur wrote:The above is why I think the regulator needs to provide further clarity, and why I wrote to them.
I have not posted the first response I had as it basically said nothing.
It would be helpful if you could give a link to the report. However, I think their position should be that there should be clarity as to whether such hybrid instruments are subject to a return of capital without a class vote or not. I think they generally support clarity so this is not a big step.GoSeigen wrote:It would help if you read their report first, which makes clear their position.johnhemming wrote: I sent another letter to the regulator more recently saying clarity was needed. With all the uncertainty about the legal position of class votes and whether this aspect of EU law has force or not clarity is needed.
I have not posted the first response I had as it basically said nothing.
It's on their website:johnhemming wrote:It would be helpful if you could give a link to the report. However, I think their position should be that there should be clarity as to whether such hybrid instruments are subject to a return of capital without a class vote or not. I think they generally support clarity so this is not a big step.GoSeigen wrote: It would help if you read their report first, which makes clear their position.
When I last did the research on this there was also EU law that applied which required a class vote.GoSeigen wrote:The issue of a class vote is not statutory but contractual. Given there are thousands of companies (millions?) with shares I doubt it's practical or in anyone's interest for the FCA to carry out this sort of exercise. As always if you invest in shares DYOFR.
Why would one leave the FCA alone when this looks like another example of FCA incompetence.GoSeigen wrote:Para 4.3 [...] Nevertheless (due to the terms under which the shares were issued and section 641 of the Companies Act 2006) Aviva has the ability to cancel the shares at par, subject to a shareholder vote and court approval. Alternatively, any issuer wishing to cancel shares has the option of doing so on a voluntary basis by offering (tendering) to buy back such securities from the holders.
There you have it in black and white. The FCA also puts the blame squarely on the market for not understanding the above.
Now can we please leave the FCA alone on this matter?
GS