The hedge funds challenging Northern Rock's directors, RAB Capital and SRM Global, have been largely defeated in today's extraordinary general meeting (EGM).
The board was successfully re-elected and investors also passed a resolution to prevent the board from issuing shares in excess of £5m without approval from shareholders.
The board was re-elected with a vast majority after all members received more than 90% of the vote in favour of their re-election.
Only one of RAB and SRM’s proposals was passed, limiting the board to issuing only £5m of new shares without holding a general meeting of shareholders.
Other proposals received more than 50% of the vote, indicating wide shareholder support for the proposals. However, they were classed as special resolutions, needing a majority of 75% to be passed, and were not able to reach the threshold required.
The rejected proposals included limiting the ability of the board to sell assets, and limiting the amount of shares investors could sell without approval.
The bank does not think the single restriction to its powers will be of major consequence and says: “The Board of Northern Rock believes that, on the basis that the third party proposals as currently formulated require shareholder approval in any event, this will not prove to be an additional material restriction on the Board's ability to pursue the strategic review.
“The Board will continue to work tirelessly, through its strategic review, to find a solution to the current difficulties that is in the best interests of all its stakeholders, including its shareholders.”
The bank is due to publish a strategic review into its future in February, though it will require the approval of the Treasury before selling to a private bidder and could still be nationalised by the Government.
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