That is why the intervention of FTSE-listed company bosses, such as Martin Gilbert, Peter Hargreaves and Andy Bell, among others, could prove very important.
Existing rules that allow current shareholders first refusal on new shares have been suspendedThese City grandees have written to the bosses of plc, investment platforms and fund managers to express deep concern that private investors are being disadvantaged and short-changed in the current wave of listed companies seeking equity capital.
This is happening firstly because existing rules that allow current shareholders first refusal on new shares have been suspended until September, and secondly because the new shares are, in some cases, being offered at huge discounts and largely to institutional investors.
And of course what happens is that the moment the shares place, the stock price bounces and the investors get a big bump – in the case of Asos recently, by as much as 50 per cent.
This means that professional investors are essentially being allowed to have bigger stakes in listed companies.
This cannot be allowed to happen.
Small shareholders may not be the majority holders in many companies, but they represent a strong, powerful and non-partisan voice in the equity ownership of a company.
The hindrance to allowing them to be able to participate seems to be technology – which is an interesting issue, because where companies want to encourage small shareholders, technological change does not seem a challenge.
And yet where they may represent a threat, then suddenly implementing technology can move at a very slow pace.
It is not beyond the wit of any investment platform or interested company to come up with a technology platform that would allow nominee account holders to vote in annual general meetings or to distribute documents to them as well.
But what would the platform get out of this?
Nothing, and so the pace of change has been slow.
Platforms also argue that shareholders just are not interested in voting, though I would argue the same was once said about charges.
And so with equity raising, the companies argue that there is no means with which smaller shareholders can be engaged in the process.
Issuing stock worth a few thousand quid would be onerous. Again, the technology is there to be trialled, but no one wants to.
Frankly, the decision seems to be that it is too annoying to have too many small shareholders on your register.
That though, should be beside the point. Share ownership is a great democratic issue, allowing anyone to take a stake in big companies and hold boards accountable.
We cannot have the need to raise urgent capital create something that puts smaller shareholders at a disadvantage forever.
It is time we took the rights of shareholders more seriously, if only to promote the future of investing.
Active managers must step up
UK domiciled funds suffered outflows of £200,000 a minute in March – or a record £8.7bn in total.
That is an awful lot of equity disappearing out the door, mainly from fixed income.
The big beneficiary though was index funds, which had inflows of around £2bn. If you look at the big inflows to individual funds they are all index funds too.
Active managers have a challenge on their hands to win the confidence of investors, even at a time when people are talking about the big losses made by passive investors.
The performance of many lifestyled investments in the crisis shows that proper derisking strategies can be effective – though these are largely automated.
It is time for the humans who manage funds to show how they add some value.
Coping with lockdown
With any TV interview about how people are coping in lockdown there are three things I would like to know: whether the person has a garden, whether they have children, and whether they have a final salary pension.
The more of these you have, the more likely it is that lockdown will not be so bad.
What a shame that there are whole generations in the private sector who will never know the security of income that comes with defined benefit.
James Coney is money editor of The Times and The Sunday Times
