INTRODUCTION Contributed by: Spencer Summerfield, Travers Smith LLP
Activism in Listed Investment Trusts A notable development during the past year has been the emergence of activist campaigns targeting the UK’s investment trust sector. The New York-based hedge fund Saba Capital initially targeted seven UK investment trusts in December 2024, having built up stakes ranging from 19% to 29%. Saba called on shareholders to replace the trusts’ directors with its own nominees and, in some cases, to substitute the investment manager altogether, citing underper- formance relative to benchmarks, which had resulted in trading discounts to net asset value. Although none of Saba’s proposals succeeded in securing sufficient investor support for board representation at any of the targeted trusts, the campaign serves as a wake-up call for this sector. Comment Despite a decrease in the overall number of share- holder activist campaigns in 2025, companies should remain vigilant. It is imperative for management and their advisers to be well informed regarding share- holder rights and expectations and to proactively develop strategies for addressing potential activist campaigns. Companies are encouraged to invest in board and management training to prepare for and pre-empt such campaigns. Conducting an audit of potential vulnerabilities may enable a company to address issues on its own terms before they are raised by activists. Maintaining continuous dialogue with shareholders and formulating an initial response plan are also essential. Additional tools and strategies are detailed in the country-specific Law and Practice section of this guide. Global trends clearly indicate that activist interven- tions are no longer confined to niche or emerging issues but now influence major strategic decisions. For investors, a thorough understanding of the legal and commercial options available remains critical to achieving their strategic objectives in increasingly sophisticated markets.
In recent years, the UK has witnessed its first instanc- es of campaigns aimed at holding directors person- ally accountable for climate change. In 2023, NGO ClientEarth instituted a derivative action against the individual directors of Shell plc, alleging their failure to mitigate climate change-related risks. Although signif- icant legal hurdles diminish the likelihood of success, such initiatives – the threat, issuance, and pursuit of permission to continue these claims – serve as tacti- cal tools for well-funded activists to disrupt or influ- ence board strategy and decision-making, while also garnering public attention for their activist investors' causes. Notably, the primary objective behind many climate-related claims may not be to secure a conven- tional legal victory but rather to spotlight practices that contribute to climate change, with litigation serving as one of several available instruments. Anti-ESG Movement The anti-ESG movement continues to gain traction, presenting new challenges for boards that must metic- ulously balance shareholder value considerations with ESG-related decisions. Recent examples include financial activism with an anti-ESG core objective. One such case involves Strive Asset Management, an outspoken investor that has recently spearheaded a campaign aimed at decoupling CEO compensation from ESG and DEI metrics. “Vote No” Campaigns The first half of the year has also seen a resurgence of traditional economic activism characterised by “vote no” or “withhold” campaigns. In these instances, activists encourage other shareholders to oppose one or more incumbent directors without nominating alternative candidates, differentiating these efforts from full-scale proxy contests. This approach high- lights a tactical shift as activists seek to exert influ- ence through simple yet impactful voting strategies.
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