Ecobond two is positive for renewables, but sparks a need for legal change

Two changes I would like to see

1. Any company making a direct offer to the public like this should introduce an extra level of corporate governance in its processes prior to issuing bonds to the public. This should include the appointment of non-executive Directors to the Board, who are specifically mandated to be responsible to bond holders to ensure that the company remains in a position to pay back the unsecured loans it raises.
2. The terms of the loan cannot preclude an investor selling his, or her, interest in the bond to a third party at any time in the process.

I originally requested that the company accounts should be displayed prominently next to the offer document. I am pleased to say that these were by Ecotricity Group Ltd and I had simply not found them. The last five years sets of accounts are displayed and available and apologise to Ecotricity for this error.

Investor rights

My concern is that the contract on offer from Ecotricity leaves retail investors unrepresented and low on the list of creditors in the event of liquidation. I would like those who follow Ecotricity to think more about the rights they give to investors, in particular the right to sell their interest to a third party. These rights however cause regulatory and cost issues which companies want to avoid and so regulation is driving a worse deal for investors. Ecotricity Group Ltd have followed the King of Shaves and Hotel Chocolat into direct bond offers to investors, all of which set a dangerous precedent for other companies to follow. The lack of investor rights could ultimately lead to allegations of mis-selling and damage future financing for companies and in particular renewable companies, such as Ecotricity. A few sensible changes to the law which meet both company cost concerns and investors' rights might prevent a future scandal.