• Tuesday, July 23, 2024

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Scottish Mortgage firm ‘misleading’ shareholders, claims fired director

Scottish Mortgage is a popular vehicle for retail investors and is valued at £9.4 billion

Amar Bhidé (Photo: LinkedIn)

By: Pramod Thomas

The director who was removed from the board of the Scottish Mortgage Investment Trust following a dispute in March has alleged that the company is ‘seriously misleading’ shareholders.

Amar Bhidé lodged a complaint with the Financial Conduct Authority, asserting that Scottish Mortgage had misrepresented the primary cause of his disagreement with the board, reported The Times.

He added that the company neglected to address his apprehensions regarding the appointment of new board members.

Bhidé, 67, a former McKinsey management consultant and professor of international business at the Fletcher School of Tufts University, Massachusetts joined the Scottish Mortgage board in 2020. It is believed that he was recruited based on the endorsement of Prof Sir John Kay, 74, a distinguished British academic and outgoing board member.

Bhidé was dismissed from the board of the FTSE 100 company after he went public with his concerns, including accusing Fiona McBain, the chairwoman, of lacking any independence.

McBain, 62, pledged to step down after the annual meeting in June, concluding her 14-year tenure. Furthermore, another non-executive left the board, and two new members were appointed.

In its annual results, the company acknowledged the dispute. “A fundamental difference in view on the suitability of the company’s investment policy as it relates to the company’s ability to invest in companies not listed on a public market . . . and on whether the board should maintain its stance on managing the discount/premium,” it said in a statement.

Scottish Mortgage is a popular vehicle for retail investors to get exposure to technology-driven businesses in the US and China, both listed and unlisted. It is valued at £9.4 billion and its shares have halved in value in the past 18 months alongside the wider technology sector sell-off.

In his complaint to the FCA, Bhidé said that his disagreement primarily revolved around the selection and appointment process of new directors. He emphasised that the statement released by Scottish Mortgage failed to mention this.

According to the report, the new complaint specifically highlights failings in disclosure.

Earlier, Bhidé had raised concerns about ‘governance lapses’ to the authority but was informed that it fell outside its jurisdiction.

Justin Dowley, 68, the chairman-elect who is also chairman of Melrose, the FTSE 100 turnaround group, dismissed the complaint.

“To repeat, the board is entirely happy that they are in compliance with all their governance and disclosure obligations,” he was quoted as saying by The Times.

The company added that it had approached five candidates recommended by Bhidé.

The complaint was directed to the primary market oversight department of the FCA, which assumes the responsibilities previously held by the disbanded UK Listing Authority. This department possesses the authority to impose fines on companies found guilty of misleading shareholders and can demand them to issue clarifying statements.

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