A large shareholder in Rights and Issues (RIII ) has once again rejected a plan to let the UK smaller companies investment trust resume share buybacks. 

At a general meeting yesterday, the board said opposition from a ‘single material shareholder’ meant a proposal to renew its authority to buy back up to 15% of its shares had been voted down. 

It comes as Rights and Issues, managed for many years by Simon Knott before Jupiter took on the mandate in 2022, has faced a widening discount this year – something buybacks would be a typical lever to address. 

The shares closed yesterday 17.4% below the underlying portfolio’s net asset value (NAV), versus a 12.4% average over 12 months, according to Deutsche Numis data. 

On the flipside, with a total market value of £96m the trust can already be considered sub-scale, with nearly £15m of recent buybacks in little over a year having shrunk it further. 

A vote on resuming buybacks was pulled at the annual general meeting in March after investor opposition.

This morning, the board, of which former manager Knott is still a member, said it was ‘disappointed’ that at a general meeting yesterday it had lost the same vote as a result of a single big shareholder. Around 751,000 shares voted against. Although that represented only 26.2% of the votes cast, the motion required 75% support. 

A statement said: ‘Notwithstanding the outcome of the vote, the board still strongly believes that the share buyback authority is fundamental to the [trust’s] discount management policy and is considering all options.’

It is unclear which Rights and Issues investor is blocking the proposal. The closed-end fund’s two biggest shareholders are Knott – holding a 16.4% stake or about 785,000 shares – and a private vehicle called Dartmoor Investment Trust with a 12.7% stake or about 610,000 shares, according to the latest Refinitiv data. 

As well as a difficult period of performance since Jupiter took over, team head Dan Nickols retired last year, with Matt Cable becoming lead manager. 

Over three years, the portfolio is down 3.6% as its AIC UK Smaller Companies sector, tracked by the trust’s trade body, has risen 7.1%. Shareholders have faced a wider 15.8% loss over that time, including dividends reinvested, due to the widening discount.