#shareholdercommunications — Public Fediverse posts

A Second Adjournment Vibe Check on QQQ

The Invesco QQQ shareholder meeting has been adjourned for a second time, because the company once again failed to muster the votes they need for their UIT-ETF conversion scheme.

Invesco came awfully close on this round, with “over 50% of shares” voting with management and for the conversion. That leaves them with less than one point to gain by December 19th, when the shareholder meeting is expected to resume. The plan is to badger non-voting shareholders until they reach or cross the 51% threshold. The company said as much on a flyer published after the first adjournment: “Mailings and calls will STOP once you vote!” Or, the beatings will continue until morale improves.

Invesco is probably going to get its way, either by December 19th or soon thereafter.* But their strategy creates some vulnerabilities, which I think are best captured in headlines like this one, published on Morningstar today: “Why has Invesco’s QQQ called me two dozen times in the past few weeks? Is it a scam?” No, it’s not a scam, but I’ve seen versions of the same question asked in a number of different places. People are asking if this is a scam because a) they are unused to being contacted by companies and funds where they hold shares, which is a problem I’ll leave for another day; and b) Invesco’s behavior right now feels scammy, a little too desperate and sweaty.

I appreciate how hard it is to engage shareholders. (I was once the only shareholder to show up for a fund’s annual meeting.) “It’s a lot like herding cats,” says one equity analyst quoted in the Morningstar piece, but tired metaphors will only get us so far. The incessant calling and mailing and emailing, the repetition of the same three or four talking points, the exclamations, all caps, and multi-color fonts on the badly proofread flyers — none of it is compelling, none of it inspires trust. A fund holding hundreds of billions in assets, with both major institutional investors and millions of retail investors, shouldn’t feel like a pyramid scheme run out of a low-budget call center.

The Invesco QQQ campaign has been annoying, tawdry, and spammy. I can anticipate the argument that in this attention economy a noisy, pounding, unrelenting beat is the only way to attract and engage shareholders; and I would concede the point but add that maybe the time to start attracting, engaging, and including shareholders in governance questions was long before the company so desperately needed their votes.

Put out a bowl of milk every once in a while and you won’t find yourself herding the cats. They will be meowing at your doorstep.

Tired metaphors aside, it’s going to be much harder to engage shareholders with last minute campaigns than with long-term, sustained programs in which they see themselves included and actually have a voice. Suddenly popping up on everyone’s phone and flooding people’s inboxes is only going to undermine trust and reflect poorly on the company.

I realize that’s not an argument for or against the UIT-ETF conversion. (I’ve laid out my arguments on that issue in a previous post.) This is more a vibe, and it’s really not a good one: it makes me wonder why they’ve resorted to these tactics, and what’s really going on with this proposal.

And just for the record, I’m sticking with the “no” vote I cast just before the first adjournment.

* Update 19 Dec 25: The deed is done. Invesco QQQ will start trading as an ETF as early as Monday 22 Dec.

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Against Converting QQQ from a Unit Investment Trust to an Open-End Fund

I’ve been receiving mailings (surface mail, emails) about the upcoming vote on Invesco QQQ Trust for a few months now, urging and imploring me to vote Yes on converting the QQQ fund from a Unit Investment Trust or UIT to a so-called Open-End Fund ETF.  So has everyone else invested in the fund.

The Future is Bright with QQQ

Your Vote, Your Growth!

Future Forward, Always

Vote Today to Make an Impact!

They’re flooding the zone with this stuff, and I can’t help but wonder why. 

One flyer, a letter from Invesco CEO Brian Hartigan, promises that the proposed change in classification of the Trust under the Investment Act of 1940 will “modernize” and “optimize” the way the fund operates and “improve the shareholder experience” – whatever that is supposed to mean. When he gets around to spelling things out, Hartigan says that the conversion “will decrease” QQQ’s expense ratio by two points. 

As a part of the modernization of QQQ, and based on information as of the Trust’s most recent fiscal year end, the Trust’s total expense ratio will decrease from a maximum of 20 basis points per year (i.e., 0.20% of QQQ’s average annual net assets) to 18 basis points per year (0.18% of QQQ’s average annual net assets), which represents an estimated cost savings to the Trust and its shareholders of more than $70 million based on QQQ’s assets as of July 1, 2025.  

On the face of it, 70 million dollars sounds like a pretty significant cost savings. Whether the “estimated” savings the reduced ER “represents” will be realized is another and more important question, and it’s one that goes unanswered. This carefully-worked sentence never says explicitly that the lower .18 percent expense ratio will actually save the fund more than $70 million – or, for that matter, that it will save the Trust and its shareholders anything at all. 

However, according to the schedule 14A filed with the SEC, the conversion of the Trust to an open-end fund will “benefit Invesco in the form of revenue and potential profits (neither of which are available to Invesco serving as Sponsor to the Trust with the Trust operating as a UIT).” At present, the Trust only reimburses Invesco for marketing and administrative expenditures; after the conversion, Invesco says,”it is likely” to do “significantly” less in the way of marketing, and the firm “believes” that the lower expense ratio will “offset” or make up for “any potential negative impacts associated with less marketing of the Trust.” These are vague promises. The only thing certain here, it would appear, is that Invesco is going to seek profits. 

The fund’s governance model will change, too. Why, I cannot tell – or, rather, I am unable to tell what specific governance problem or area of governance they might be trying to fix. In any case, if shareholders approve the conversion, the fund’s existing Trustee (BNY) will be replaced with “a slate of individual trustees” – nine people, all of whom seem, on paper at least, well qualified for the position. My problem is not with their resumes. I worry, instead, about the coordination and agency problems that are likely to come with this new management layer and the risks associated with the move from a relatively impersonal Trustee (a bank) to nine persons.

Notably, these nine are not going to take on the custodial and administrative work the bank currently does. Invesco will still have a Trustee handling that work. What are they going to do? They are going to take “discretionary actions,” according to the SEC filing. QQQ will be taken out of the hands of a Trustee with “limited discretion” and subjected to the “informed business judgment” of a Committee of Nine. 

the transition of QQQ’s governance model would nonetheless represent a movement away from a governance model providing limited discretion on the part of an institutional Trustee to a governance model that permits discretionary actions to be taken by the board of trustees in accordance with the terms of the governing instruments and the board of trustee’s informed business judgment.  Such shift [sic] may introduce new governance and oversight risks that are not presently experienced by the Trust and its Shareholders, and could allow the Trust to take actions it is not presently able to do.

So the improved shareholder experience promised by CEO Brian Hartigan sounds like it’s going to be a riskier experience. Who signed up for that? (Not me, and I’ve been holding QQQ since 2002. I’d be much more supportive of measures to mitigate risk.)

Among the actions the Committee of Nine could take after the conversion is to decide that they no longer want to work with BNY, and hand the custodial work the bank is currently doing to another institution. That could be a good thing – maybe there are better Trustees out there – or it could be a situation where the Committee of Nine try to fix what ain’t broke, or put their own self interest above that of shareholders, or demonstrate less than good business judgment. It’s been known to happen.

Then there’s the matter of securities lending. As a UIT, QQQ cannot lend securities; as an open-end fund, it can. Invesco and the Trustee chosen by the Committee of Nine stand to benefit from fees and revenue splits associated with these loans. But as the SEC filing acknowledges, lending securities “entails a risk of loss” to QQQ. Think short-sellers and hedge funds; think defaults and gap risk, too. 

So in light of the misgivings I have about the Committee of Nine and the improved shareholder experience on offer, I vote no, and encourage others to read the SEC filing carefully and consider doing the same.

Update 25 October 2025: Yesterday, Invesco announced that it would adjourn the shareholder meeting and postpone the QQQ vote until 5 December, because they did not have a quorum.

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Reply from the CEO of BacTech Environmental

Well, that was fast. Only a few hours after I published my post about BacTech Environmental this morning, CEO Ross Orr sent this reply — drafted, he notes, by BacTech’s lawyer.

The requirement [when it comes to requesting an extension for holding an AGM] is that an application be made to the court of competent jurisdiction in order to have a waiver/extension of the meeting prior to the deadline. BacTech did not have the means to hold a meeting and neither of the means to pay for legal counsel to ask for an extension.

It is the reason why Resolution  #3 in under the heading “Past annual general/special meetings” exists (page 9 of the Circular). We also ask for the approval that will allow us to move forward with a court order to authorize the failure to respect the CBCA.

Essentially asks that the shareholders to forgive past sins [sic], and if deemed necessary, proceed to a court order, including:

3. The Shareholders, hereby approved, ratify and adopt all past acts of the board during 2021 2022 and 2023, notwithstanding the failure to hold an annual or special general meeting or hereby consent to an order of a court or such applicable security commission if necessary, outstanding any efficient deficiency of the corporation and compliance with Part XII (shareholders meetings), Part XIII (proxy solicitation) and Part XIV (financial disclosure) of the Canada Business Corporations Act for the financial years end of 2021, 2022 and 2023.

While there are technical flaws in this approach, it is an approach which allows clearing them up without the additional cost for legal fees (prior to the meeting), and asking a court to clarify this. The fact that, as a reporting issuer, BacTech has continued to respect its obligations for continuous disclosure, including the filing of financial statements would, in our view, allow a court to proceed with such an order upon our application.

So, the company did not ask the Court for an extension for calling an annual meeting for the same reason it did not hold an annual general meeting: “cost.”

I can appreciate the need to keep the purse strings tight. This is a relatively small company, with a market cap of less than $10 million CAD, trying to do some technically very difficult projects. Still, I wonder if what prevented the company from holding an AGM was not lack of resources so much as lack of resourcefulness — or maybe disordered priorities. I like to think that a company can be both scrappy and responsibly governed.

While I can’t set aside all my initial concerns, I am impressed by the promptness of the reply and its elements of candor (e.g., “past sins,” “technical flaws”). Now to sit down again with the management circular and ballot, and reconsider.

Postscript 11 September 2025: In filings on SEDAR from the period in question, the company tells the same story it tells here: it cannot meet administrative costs and other financial obligations, and there is “serious and significant doubt about the Company’s ability to operate as a going concern.” That’s from a 2022 filing. The trouble I’m having after reviewing this and other filings is not with the company’s failure (or inability, but it amounts to the same thing) to comply with Canadian securities law per se; it’s not even primarily with the company’s failure to communicate with shareholders during this period, though that would have been helpful. The main problem I am wrestling with is the language of the two resolutions mentioned in my original post on this topic. It is so sweeping, and asks shareholders to “forgive” (BacTech’s word) so many actions — basically to approve every decision taken by the Board over the three-year period when it did not (or could not) meet and consult with shareholders. So I am still a “no” on these proposals, but I understand the Board’s position and appreciate the difficulties it had. 

Update 17 September 2025: Both resolutions passed, leaving me in the dissenting minority — a position I’m in more often than not.

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Does the Board of BacTech Environmental Corporation Expect Shareholders to Wink at Years of Non-Compliance?

I’ve just written to the investor relations people at BacTech Environmental Corporation to get some background information on two extraordinary resolutions included on this year’s proxy form.

Both resolutions have to do with the Board’s failure to hold an annual general meeting for several years in a row.

As a result of insufficient financial resources for the years ended 2021, 2022 and 2023, the Corporation has not held its annual general meeting of shareholders pursuant to section 133 of the Canada Business Corporation’s [sic] Act. The Corporation has complied with its continuous disclosure obligations and filed, among other things, its audited and interim financial statements…as required.

There is (on page 9 of the management circular) a broad resolution asking shareholders to “approve, consent, and/or waive the Corporation’s deficiencies with respect to providing notice of and holding its annual general meeting.” It’s a request for blanket absolution, extending from non-compliance with section 79 of the Ontario Securities Act (which has to do with sending out regular financial statements to Ontario shareholders) to past appointments of auditors, and “all past acts of the Board, all lawful acts, contracts, proceedings, appointments, and payments” over the last four years or so.

Another resolution, Ratification of Stock Option Plan (on page 8 of the circular), asks shareholders to ratify and approve retroactively “all past issuance of stock options granted by the board” for fiscal years 2021-2024, “notwithstanding any defect or non-compliance with annual general meeting requirements.”

Right now, I am set on voting against both resolutions.

The Board appears to be looking for release from its obligations to shareholders and legal cover. Essentially, these two resolutions ask shareholders to do for the Board of BacTech Environmental what the Board of BacTech Environmental failed to do for shareholders: namely, bring the Board, and the company, into compliance with Canadian securities law. And while I am aware of the company’s cash flow problems, as indicated by this chart, I still have some trouble accepting the explanation that “insufficient financial resources” are the reason for the board’s failure to hold an annual general meeting. It seems more like a lack of resourcefulness — or, worse, negligence or indifference. This impression may simply be due to the fact that the Board has in its communications with shareholders done a poor job at explaining itself.

I would also like to know (and this is the question I put to the BacTech investor relations people) whether the Board applied for a Court order extending the time for calling an annual meeting in 2021, 2022, and 2023, as described in Section 133 subsection 3 of the Business Corporations Act. A quick search on SEDAR didn’t bring up anything, but maybe there’s another place where a record of these applications would be kept. Timely application for extension each year would at least indicate that the Board was making a good faith effort to comply with the law and was trying to do right by shareholders.

At the moment, the answer to the question asked by my title seems to be “yes,” but I am open to hearing the Board’s side. If I get a response from BacTech before the 12 September voting deadline, I will post it here and revisit my proxy.

Update: I heard back from the CEO of BacTech just a few hours after posting this. See this post.

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