(February 28 – 09:50 ET) – Standard Life is today vowing not to demutualize.
The firm’s board has rejected a policyholders’ request to convene a special meeting to vote on a demutualization proposal. The board says the request is invalid. According to the firm, “Standard Life has received advice from its legal advisers and from leading counsel that the resolution which has been presented seeks to direct the Board and is therefore not a proper resolution to be put to the Company in a general meeting.”
Nevertheless the board also says it supports the idea of staying mutual. “The Board reviewed this as recently as last September and concluded unanimously that the interests of the company are currently best served by retaining Standard Life’s mutual status. This remains the Board’s firm view.”
It argues that not having to pay dividends to shareholders is an advantage for the firm, and that it has the strength and scale to grow into the future. After the flurry of demutualizations both here and in the U.S. and U.K., some of the new public companies have had a tough time adjusting to life in the hands of demanding shareholders. However, many firms believe demutualization is a necessary step if only to provide deal currency in the looming convergence of financial institutions.
Standard Life isn’t buying this line. It also isn’t interested in rewarding quick-buck artists speculating about demutualization. “The board believes that policyholders bought their policies for long term performance and security. Speculators, who are interested only in a windfall, bought theirs for the potential to make a quick profit. The board therefore intends to maintain the company’s mutual status.
– IE Staff