Commenting on the disagreement between mining giant Glencore and two major investor groups over the recent £1.6 billion equity placing, Oliver Parry, Senior Corporate Governance Adviser at the Institute of Directors, said:
“Glencore’s conduct falls short of what we would expect of a major global company. Their decision appears to be in direct contravention of the rights of shareholders and goes against a pledge they made at their AGM in May. It flies in the face of the shareholder pre-emption rights which are designed to protect investors in these exact circumstances and should worry anybody with an interest in upholding the highest standards of corporate governance at Britain’s biggest companies.
“What is particularly worrying is the fact that Glencore failed to consult all of their shareholders, in particular minority shareholders, during this whole process. It is vitally important, especially when firms are intent on contradicting previous commitments to shareholders, that they open a dialogue with all investors at the earliest opportunity. This should be standard practice for a company of Glencore’s standing and investors need to think carefully before providing capital to a company that is so willing to disregard good governance. Unfortunately, many seem prepared to overlook it.
“This whole episode sets a worrying precedent. At a time when public trust in ‘big business’ remains low, it is crucial that companies like Glencore adhere to basic levels of good corporate governance. This deal may not catch the imagination of the public in the same way excessive pay or a misselling scandal might, but disregard for such a fundamental tenet of corporate governance still raises alarm bells. At the very least, all of Glencore’s shareholders deserve an explanation and the right to be consulted on any future decisions of this kind.”