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Enhancing The M&S Approach To Shareholder Dormancy

To build upon their history of proactively tackling the issue of dormant shareholders, M&S amended their Articles of Association in 2021. These changes are now driving improved performance.

Through amending their Articles of Association, M&S aimed to:

  • Shorten the length of time before a dormant shareholding can be forfeited
  • Cut down volumes of undelivered mail
  • Issue shareholder payments electronically where possible
  • Stop attempting electronic dividend payments that are expected to fail

These recent changes are driving improved performance in 2022:

  • Over £730k in value to be reunited with nearly 400 re-engaged shareholders this year
  • Over £1.3million anticipated to be returned to M&S following the next forfeiture task
  • Amending the Articles has nearly tripled the predicted material value for M&S

Background to M&S Forfeitures

EQ have been delivering Share and Dividend Forfeitures for M&S regularly for the past decade – M&S were the first client EQ ever performed this work for in 2012.

Each year, EQ identify an audience of dormant M&S shareholders. These are shareholders who have not been in contact with M&S nor cashed a dividend cheque for at least 12 years, and/or post items have been returned undelivered to EQ. Following attempts to trace these holders, a notification is sent to all eligible holders who remain uncontactable, advising them that their shares and unclaimed dividends will be forfeited to M&S unless they respond within the necessary time period.

Following the forfeiture of 844 shareholdings in 2012, an average of 237 further holdings were forfeited each subsequent year up to 2020. To date, a total of 2,738 shareholders have been removed and circa £2.3million has been returned to M&S as a direct result of Forfeitures.

Share Register Digitalisation

In furtherance of their objective to promote shareholder digitalisation and overall engagement, Deputy Company Secretary Rob Lyons and his team were keen to make positive changes and lead the way in which Forfeitures and dormant shareholders are managed.

At M&S we believe it is important to have an active shareholder base. It is no longer realistic for Co Sec’s to passively manage their share register. We try and work in partnership with Equiniti to undertake activities that drive our dual limbed strategy of shareholder digitalisation and increased shareholder engagement.

Rob Lyons, Deputy Company Secretary, M&S 

Rob and his team felt that the 12-year dormancy period defined by Model Articles was an excessively long period to wait to act to regain contact with or forfeit “gone away” shareholders. Analysis undertaken by EQ identified that reducing the qualifying period for forfeiture not only allowed them to act sooner to regain contact but would also greatly increase the number of shareholders and amount of dormant assets in scope for forfeiture; which would in turn lead to significant cash value being returned to M&S.

The M&S team and EQ also found that as a result of increasing digitalisation and initiatives such as the removal of cheques, it could take many months or years of undelivered mail items before shareholders could be classed as “gone away” (i.e. three separate items had been returned undelivered to EQ). The logical solution was to cut the criteria down from three undelivered items to just one.

At the 2021 AGM, the following changes to M&S’s Articles of Association were proposed and approved with 99.98% votes in favour:

  • Reduce the period of time after which we are able to forfeit a dormant shareholder’s dividends and shares, from 12 years to 6 years, following efforts to trace the shareholder.
  • Clarify the Company’s definition of inactive or “gone away” shareholders, to ensure that we do not continue to send mail to shareholders after one instance of returned and unopened mail, and we do not continue to pay dividends by bank transfer after one instance of a failed dividend payment (in either case following reasonable enquiries to establish the shareholder’s current correct details).
  • Clarify that shareholder bank mandates for dividends can also be used for “other money payable in cash relating to a share”, ensuring that cheques are no longer used for any payments due to shareholders in relation to their shares.


Over £730k of Dormant Assets to be reunited with Shareholders in 2022

Delivering Material Value To M&S Shareholders

Following the 2022 tracing efforts and Forfeiture notification mailing, 393 dormant shareholders have made contact with either EQ or M&S so far. As a result, EQ will be able to reunite these holders with share and dividend assets with a combined value of circa £520,000.

Separately, through the bulk release of unclaimed dividend payments to the bank accounts of shareholders with an active mandate instruction in place, EQ have successfully returned an additional £210,000 to shareholders.

M&S’s initiatives will bring other benefits to their shareholders beyond reuniting them with their assets, including:

  • Increased Engagement Levels – less dormant capital on the register means more shareholders are actively engaged with their assets and with M&S.
  • Protection of Shareholders’ Personal Information – changing the “gone away” criteria will greatly reduce the number of mailings containing personal details which are sent to incorrect addresses.

EQ estimate that approximately 470 shareholders could have been forfeited and £450,000 returned to M&S during the next forfeiture event had the dormancy period not been reduced.

Instead, M&S are now on-track to forfeit 2,200 shareholders and receive over £1.3million.

Delivering Material Value To M&S

As well as creating material value for M&S, the changes to the Articles of Association will cut M&S’s spending by:

  • Halving the number of years during which mailings (e.g. cheques and annual reports) are sent to dormant shareholders before their holdings can be forfeited
  • Ceasing the issuance of mailings to addresses of “gone away” shareholders
  • Allowing M&S to act sooner to regain contact with “gone away” shareholders
  • Permitting both historic and future non-dividend cash entitlements to be paid electronically
  • Not attempting electronic transfers of dividends to bank accounts where payments have previously failed
  • Improving the operational efficiency of M&S and its registrar, EQ

Besides the cost benefits, running periodic Forfeitures creates other advantages through reducing the overall number of shareholdings; reducing the proportion of “gone away” shareholders; and bringing incorrect address details up-to-date – all of which result in a tidier, more accurate, and more engaged shareholder register for M&S.

EQ is the UK’s leading share registrar and employee share plans provider. We handle multi-billion pound corporate actions and support new companies making their debut as a listed company.

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