Bank of Valletta will hold its annual general meeting today, May 9.

The directors are asking shareholders to approve changes in their rights and obligations, as spelt out in the statute. What is surprising is that BOV wants shareholders to abrogate the statute, all at one go, and replace it with one long one available on its website. Then they tell us that the “material changes” are in just two articles.

The dictionary defines “material changes” as changes that make a difference in the rights of the people and organisations that sign or approve a document.

Why use this unusual way when the normal way to change two clauses is to amend two clauses without abrogating the whole statute?

One change is aimed to introduce in the shareholding a new type of complex shares that are too complex to leave open to ordinary or retail investors. BOV rightly wants to exclude ordinary shareholders from these investments and reserve them to banks, professional and other sophisticated and large-scale investors.

But high complexity usually means also high risk. Are ordinary investors sufficiently protected from high risk when high-risk investments are thrown into the same pot as the investments of ordinary people who need a high level of security for their savings? Did not regulators learn the lesson from the 2008 crash that low-risk and high-risk banking should be done by different set-ups to avoid the small investor being exposed to undesired high risk?

BOV is right in acknowledging the need for ordinary investors not to be foisted with changes in their rights that are too complex for them to understand. True to that principle, it is still in time to ask for a change of just two articles instead of revoking the whole statute.

BOV is also still in time to make sure the changing of the investment and risk base of a bank is given the time and thought it needs to be done well. 

Meanwhile, the regulator, too, is still in time to explore and deploy practices learnt from the more mature jurisdictions.