Andrew Sutch, chair of Hipgnosis Songs Fund (SONG ), is stepping down as the board of the alternative income fund sets out a plan to sack fund manager Merck Mercuriadis if a proposal to sell a fifth of its portfolio fails to revive the beleagured share price.

With its shares continuing to flounder on a 48% discount to net asset value and investor support for a continuation vote next month looking doubtful, the £1bn royalties fund has set out three new measures to protect shareholder returns:

• if the continuation vote is passed on 26 October, a further vote will be held in January 2026, again at the annual general meeting in 2028 and every three years subsequently;
• the notice period for Mercuriadis’ Hipgnosis Song Management will be shortened to 12 months; 
• if, by the end of next year when the closed-end fund’s half-year results are published, SONG’s shares have traded at an average discount of 10% or more, the board will serve notice to terminate HSM’s contract.

Sutch, a corporate lawyer and former partner at Stephenson Harwood, will step down next year before the AGM. A search for his replacement has begun. Also exiting this year is non-executive director Andrew Wilkinson, whose departure will reduce the board to five from its current six.

Cindy Rampersaud, who joined the board as an independent non-executive last month, will replace Wilkinson as chair of SONG’s audit and risk management committee.

The announcement came as the investment company published a circular detailing the catalogue disposals a day later than planned, a delay that added to the uncertainty around the complex deal and whether it was sufficient to win shareholders around.  

Stifel analyst Sachin Saggar had earlier said shareholders were unanimously ‘unhappy’ and minded to vote against both continuation and the asset sale, based on his ‘interactions’ with them over the last week. 

‘For all intents and purposes, we think the deal is dead, and it is just a matter of whether the board accept this, or force an unnecessary vote. It is unfortunate, as we felt there was clear space for a landing zone where shareholders would have been happy to accept a sensible proposal and in fact that was our base expectation,’ Saggar said in a note today.

He suggested a ‘full refresh’ of the board was necessary to revive shareholders’ trust in a fund that, after a good start five years ago, had left them nursing losses as concerns over valuations and disclosure mounted and rising interest rates and bond yields made its 5% yield less attractive.

‘The positive for shareholders is that the backdrop for the music sector appears strong and there is considerable value to be realised over time if this can be managed in a sensible way,’ the analyst added.

Earlier this month, SONG’s rival Round Hill Music Royalty (RHM ) soared 65% as its board recommended a cash bid from song manager Alchemy Copyrights, which trades as Concord. There has been speculation that Blackstone, the private asset manager that owns a majority stake in Hipgnosis Song Management, could bid for SONG.