Proposals for cash exit and switch to Invesco unit trusts to be held on 16 July
Invesco backed shareholders have called an emergency general meeting (EGM) in an attempt to force out the board of the GT Japan investment trust.
This follows the decision by the board at the end of last year to transfer management to Sloane Robinson, as the trust had underperformed its benchmark and its peers.
The requisition to call an EGM, which will be held on 16 July, puts forward resolutions that each of the current five board members of the trust be voted out by shareholders, that the trust be liquidated and that investors be given the option to take cash or roll over into one of the group's Japan unit trusts.
The board of the trust, headed up Anthony Bushell, has dubbed the reconstruction plans 'unwanted, vague and ill-defined.'
In response, Invesco has said it is responding to calls from 13.5% of the shareholder base of the trust, concerned that the board did not put the change of manager to shareholder vote. This is an action which does not breach company law but, Invesco said, does raise issues of corporate governance, concerns which the board denies.
The board has also announced that if shareholders reject the Invesco proposals, it will put forward plans within 60 days to restructure the trust, allowing it to continue as an closed-end vehicle while giving shareholders a cash exit and thereby avoid the cost of setting up a unit trust and the bid offer spread that could entail.
Bushell said: 'Invesco was responsible for taking unwarranted risks with shareholders' money, using gearing of 33% to invest 63% of the portfolio in Japanese telecom, media and technology stocks against a 35% weighting in the Topix Index, which they underperformed by 31% in their final year with the fund.
'Having underperformed the sector average by 40% over the past three years, the board cannot possibly recommend any proposal that includes Invesco in the future.
'We have every confidence that the new manager's investment policy of providing absolute returns will benefit the performance of the successor vehicle.'
The shareholder resolutions put forward the proposals to remove the board of Anthony Bushell, Robert Dundas, Eric Elstob, Haruko Fucuda and Christopher Thompson. In their place would be a new board consisting of George Mitton Kirshaw, Philip Stephens and Ian Harvey Stephenson.
The three proposed directors have been suggested by Invesco and are acceptable to the shareholders bringing the requisition, according to Invesco's Adam Cooke, director of specialist funds.
Two of the three already sit on investment trust boards. George Mitton Kirshaw sits on the boards of the Standard Life Private Equity and Royal London Income & Growth trusts, as well as having conducted research into institutional investment trust clients for the AITC. Stephens sits on the board of the Invesco Geared Opportunities trust.
Cooke said: 'Some of the shareholders felt unhappy that when the management contract was moved from Invesco to Sloane Robinson, the board did not consult with them before going ahead.
'Those shareholders feel there is an important principle of corporate governance at stake and they wanted to have the chance to put forward these resolutions, which will give shareholders that choice.'
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