West Somerset Railway General Discussion

Maybe not straightforward, but not insurmountable if those responsible for governance were willing to take the idea seriously.

The North Norfolk Railway plc is asking its shareholders to agree a “proposed new structure, which will need to be approved by Shareholders at a General Meeting on 1 February, provides the Society with 100% of the voting rights in relation to the PLC whilst preserving existing travel benefits for shareholders.”

The ‘Society’ is the railway’s existing support charity. Since most plc shareholders (like the WSR) probably regarded their share-purchase as a donation I imagine the NNR proposal has every chance of a 75% majority vote if members are invited to see it in the long-term interest of the railway they love.

For the WSR I imagine a new charity’d be preferred to the WSRA (the association has previously expressed willingness to be absorbed by such a new body, and therefore likely to vote for it with their substantial plc shareholding).

Dissolution of the plc needn’t be an issue at all if it continued to exist, controlled by the new charity as in the NNR proposal.

 

75% majority of all shares, or of those voting?

 

Of those shares voting at a General Meeting. Otherwise it’d be impossible to restructure any company where a substantial number of shareholders had disappeared (e.g. moved or died without anyone registering a change of address or ownership) or simply didn’t vote.

 

That was what concerned me.


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Or if you have a large number of shares held by a small number of shareholders who get a more heavily weighted vote

 

As I understand it, at the moment, the shareholders of the WSR, are a multiple of small shareholders, with 2 charities holding between them about 24 per cent of the shares, The PLC will use its proxy to ensure nothing can change, along with the shares of the steam trust, who support the PLC.
Unless the present board changes, has a new chair, who will use the proxy vote to in effect vote itself out of existence things are going to stay as they are, because the board , no doubt influenced by its chair, don't want to lose power, see this it what this never ending saga is really about, Gaining power, and keeping on to it, Oh be sure it will be dressed up as doing what's best for the railway, but anyone that is seen as a threat, has been purged,

There will have to be a change, but it won't come this side of a catastrophic failure of the plc, it will come as a result of the failure of the WSR, and it will be done by those trying to save as much as they can after the PLC has brought it to the point of collapse, I think there will be a much reduced railway.

 

The greatest threat is the belief that the PLC could collapse and that a viable railway could be rescued from the ashes. Collapse would almost certainly mean loss of the vital Light Railway Order and probably termination of the lease of the trackbed. In any event PLC assets would be sold to pay its creditors . It seems sometimes as if some actually want the PLC to collapse. Be careful of what you wish for!

 

Whilst it was wonderful that Llangollen survived there's a risk that in so doing it created a false sense of security. Its circumstances were very different to those of many other heritage railways . The crown jewels in the form of the Light Railway Order and enough operating assests were not held by the subsidiary that failed. Had that not been the case it's hard to imagine that the railway would exist today. One effect is ample evidence of greater emphasis on corporate structures and governance especially ways to ensure heritage railway directors and trustees have the competence to manage their railways in an increasingly challenging environment. As always what tends to kill businesses, even profitable ones, is running out of cash. That can happen suddenly before there's any realistic opportunity for a "hands in pockets" rescue. Once the spectre of cash insolvency rears its ugly head it's often too late to do anything.

 

Several years ago, was it not you who proposed an appropriate restructuring of the WSR, which most parties seemed to think would have been about right. Even the PLC didn't actually say that it was a bad idea: instead they made a very dubious claim that the restructuring process itself would be too expensive.
What would you recommend now?

 

I'd agree that a substantial corporate restructure will inevitably incur expensive professional fees. On the other hand the tax and fundraising opportunities available to a charity can more than compensate. Finacially it's likely to be a case of short term pain for longer term gain. The principal choice is probably between an incorporated members' charity limited by gurantee and a charitable community benefit society. The second option is a relatively recent one which offers lighter touch regulation by the Financial Conduct Authority and avoids much of the burden of Companies House and Charity Commission regulation. The challenge is moving from a company with shareholders who notionally own the railway (or at least the elements belonging to the PLC) and can exercise some influence or control through one vote per share to a structure under both forms of charity where it's one vote per member. If shares have been purchased primarily as donations with the benefit of travel concessions (as is often the case for heritage railways) then a reduction in larger shareholder voting power may not be a material issue. However it can affect the election (or removal) of directors who have the real power to run the company and are responsible for doing so.

 

THE ELEPHANT IN THE ROOM

Based on many of the comments, I believe that as long as certain individuals remain involved, there's little to no chance of the WSR transitioning into a charity. After all, why would they, when those determined to oust the PLC directors would likely aim to secure positions on the charity's board instead?

 

If you are referring to Robin White, She has made it very clear that she has no intention of any involvement with any seat on any board, and I'm a bit confused by what you are referring to as being the Elephant in the room, The PLC are very unlikely to want to lose the stranglehold on the WSR they enjoy with things as they are, they cannot be held to account by the membership as they hold the aces in proxies and by virtue of their close relationship of the Steam heritage trust. And its block of shares.

 

Being referred to as 'the Elephant in the Room' is less than flattering but let me make it clear that I will not stand in the way of progress - I seek no WSR office of any kind. I am priviledged to make a number of contributions elsewhere in heritage, including railway heritage. I am, for example, presently assisting two heritage railways and one volunteer see fair process followed and have a telephone call on another such matter in prospect this evening. One of the 'above' described me as the 'alternative HRA' which amused me. I reserve the right to be a critical friend to any future regime.

The present WSR model is clearly broken and the longer a move to a charitable structure is delayed, the less likely it is to succeed as the cash and assets drain away. IMHO those presently holding office that keep the present regime in being are by that very stance, unfit to hold office in a future structure, and the longer they have been in office, the more true that is.

It seems to me that the essential question is: 'Do THEY love the Railway and are as committed to its future as I am, such that THEY are prepared to put personal ambition and position aside for the good of that Railway and the West Somerset community?'

 

I think that argument works both ways, as the last decade plus of boardroom politics at the WSR has shown, amongst many other things, that some are very determined to obtain and retain power.

While I'm sure some peoples' views of @Robin Moira White are part of their behaviour, I find it hard to believe that those are so motivated by animus that they are not making necessary changes because of those views.

 

Regardless of who or what you see as the elephant it doesn’t necessarily need to be a problem for the plc’s current directors since it is not essential for a new charity, of their creation, to have a democratically elected board.

 

True.

BUT firstly why restructure if the structure works for those currently in charge ?

Secondly would a restructuring without democratic control of the board be accepted by the wider WSR Community? I suggest not.

 

Whether it's an elephant or not it's certainly the core issue. The fundamental challenge is that the PLC's railway assets are effectively owned by its shareholders and managed for their benefit. Quite properly and in accordance with its constitution they are managed and controlled by the PLC directors. It's not a case of them clinging wrongly to power as some suggest but of the reality that in a shareholding company that is where the power and responsibility lies. The reference to the wider WSR community is probably shorthand for the volunteers and the members of the two support charities. It seems that some of those see themselves as the rightful custodians of the railway and guardians of its traditions. Their inability to make that reality is a constant source of tension and frustration.
Given its shareholder base one option would be to convert to a charitable community benefit society with all the consequent tax and fundraising benefits of charitable status ( as well as lower compliance costs). Shares in the PLC would become shares in the CCBS. There could be considerable financial benefits but the two support charities and their members would remain much as they are. One seems content with that. A significant effect of the change to a CCBS would be its voting would be one vote per member not one vote per share. That would reduce the voting power of any large PLC shareholders but of course that includes the two charities which would each have only one vote. Those who wish to see the WSR move in a different direction could always buy shares in the CCBS where their votes would have far more potential effect than indirectly via the charities' shareholdings in the PLC.

 

Wow. As corporate communications go, that comes over as a bit entitled - "we're in charge (power, responsibility), we know best, come and join us". It doesn't score well on bringing others along with you, whether they are elephants, volunteers or members.

Unfortunately, this can be true of many volunteer-run organisations, where those in senior positions don't necessarily have the people and influencing skills, and rely instead on weilding power and ignoring those who they disagree with.

 

The power and responsibility do indeed lie with the board, and will continue to do so even if and when the PLC transitions to a different kind of corporate entity. What concerns many observers, whether active in some role on the railway or only passive observers on this forum, is that some of the individuals who are members of the board (or are trustees of the WSR charities) cling to their positions and allow only those volunteers to remain who either agree with them or disagree in silence. It has been pointed out before that even the present responsibility only to the shareholders involves the continued viability of the railway, which in turn depends on keeping various other parties happy.