Legal & General has added to the pressure on Unilever over its vote to exit the FTSE 100.
This morning (28 September) Legal & General Investment Management added its voice to the fund managers saying they would vote against Unilever's plans to abandon its dual UK-Dutch listed status.
At the moment Unilever is listed on both the London Stock Exchange, where it is part of the FTSE 100, and the Euronext Amsterdam, where it is part of the Dutch blue chip index, the AEX.
But it plans to scrap this status and list exclusively in Amsterdam, which would mean funds that invest in UK equities and are in the IA UK All Companies or Equity Income sectors would be forced to sell the shares.
So far Lindsell Train, Aviva Investors, M&G and Columbia Threadneedle have all raised concerns about the plan and have threatened to vote against it on Thursday 25 October.
Unilever said its plans were not a result of the UK leaving the European Union, but rather to make the company structure simpler. In addition, the Dutch government recently announced tax changes to encourage companies to locate corporate headquarters in the country.
LGIM said it had taken the "unusual step" of declaring its position following "significant" client enquiries.
Sacha Sadan, director of corporate governance at LGIM, said: "As a supportive shareholder in Unilever PLC for more than 25 years, we have engaged with the company on a number of issues including its decision to unify its corporate structure.
"We asked the company to ensure that any approach they take safeguards the ability of our clients to maintain their investment and benefit from Unilever’s continued success. As part of our engagement with Unilever we have also worked with the Investor Forum to engage collectively with other investors.
"We understand Unilever has explored a number of alternatives in reaching its final decision. However, we do not believe Unilever has made a compelling case for many PLC shareholders to support the recommendation in favour of Dutch incorporation. Therefore, we intend to vote against Unilever’s proposed resolution."
LGIM's announcement means five of the top 10 institutional shareholders of Unilever stock have all threatened to vote against the move - though collectively they only hold 6.95 per cent of the company's shares.
For Unilever to be allowed to move, it must secure 75 per cent of the shareholder votes in the UK.
Funds in the IA UK All Companies and Equity Income sectors must have 80 per cent of the capital in UK listed shares. Unilever being re-classifed as an overseas holding in those funds may push them over the limit.
UK tracker funds would also have to sell the shares as the role of those funds is to passively buy the shares of an index, if Unilever ceases to be part of the index, then those funds have to sell the shares.