Baillie Gifford US Growth (USA ) narrowly avoided a boardroom crisis after activist investor Saba Capital voted heavily against several key resolutions at the trust’s annual general meeting.

The AGM, held yesterday, saw all ordinary resolutions pass by poll, which included granting the board the authority to repurchase shares. 

However, several resolutions attracted a significant number of votes against. 

Of particular significance were ordinary resolutions 4–7, covering the re-election of USA’s four non-executive directors. In each case, of the 59% of shares that voted, roughly 52% supported the re-elections while 48% voted against.

The board noted the votes against were ‘almost entirely’ attributable to a single party, pointing to its largest shareholder and industry activist Saba Capital. 

Chairman Tom Burnet noted that Saba had rejected an offer of a meeting following the trust’s annual results in August.

‘Whilst we recognise their right to exercise their democratic vote, it is disappointing that Saba, without prior notice of their intention, should use their substantial holding to attempt to vote off the whole board of directors.’

Had Saba succeeded, without directors the company would have been in breach of the companies act, UK listing rules and its own articles, which would have had significant consequences for all shareholders.

Burnet added: ‘We will seek to engage with Saba to understand their position.’

Peel Hunt analyst Anthony Leatham called the results ‘a close call for USA’, noting ‘the ordinary resolutions at yesterday’s AGM could have failed had other shareholders not voted’.

Saba holds a similarly large stake in Baillie Gifford’s Edinburgh Worldwide (EWI ) trust. USA is trading at around a 9% discount, while EWI trades at roughly 5%.

As such, Leatham added: ‘This serves as a warning shot for boards and shareholders, underlining the importance of active engagement. Given that Saba has not targeted board compositions directly since its earlier campaign, this voting activity may come as a surprise to some.

‘We also question what Saba’s intentions might have been had the USA directors not been re-elected.’