It is the opening gambit of a growing type of corporate battle that often leaves blood on the boardroom carpet.

In the past couple of years, activist investors have challenged and brought down 40bn Dutch banking giant ABN Amro - eventually taken over by a group including

Now events last week at football club - worth a mere 4m - could provide fresh ammunition for activists.

Millionaire property developer Graham Ferguson Lacey, the largest shareholder, tried to call an extraordinary general meeting at Millwall, where Heather Rabbatts is chief executive, over the club’s development plans.

But directors refused the meeting, invoking the 2006 Companies Act and saying that he intended to wrest control of the club.

However, legal experts believe the same law could soon be used by activists to hit back at directors.

Tim Stocks, partner at top City law firm Taylor Wessing, said refusing to hold an egm was a big risk. ‘The power to do this comes from the latest Companies Act, but it also gives very significant powers to shareholders,’ he said. ‘It is almost an activists’ charter.

‘The Act gives shareholders the right to sue directors personally. In the past, if an activist thought a board was acting against the interests of investors, he had to get the company itself to sue, which was obviously almost impossible.’

The Act could be the latest weapon for shareholder agitators, some of whom have been coming under pressure.

Reports last week suggested giant American pension fund Calpers was withdrawing cash from activist Knight Vinke, which has demanded change at Britain’s biggest bank, However, Calpers told Financial Mail it would continue to place funds with Knight Vinke, run by Eric Knight, despite its underperformance.

‘We don’t bale out just because of a bad year,’ Calpers said. ‘We are long-term investors and we give people the benefit of the doubt. I’m not sure how long we will maintain this placing if the numbers deteriorate. I guess it’s ”watch this space”.’

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Glen Suarez, Eric Knight’s right-hand man, said activism was a vital part of keeping large companies in check. ‘It is shareholders who own the company and they ultimately take the risk,’ he said.

‘We should be able to question management on what they do. The only difference with activist funds is that we stand our ground and fight for our case.’ Research by the London Business School in 2006 suggested activist investors could help improve value at Millwall companies, but recent performances have been mixed. Shares in activist Brian Myerson’s Principle Capital Investment Trust have slumped 29% in the past six months, while hedge funds and SRM lostms on investments in Northern Rock.

More successful activists include hedge fund Toscafund, which has a stake in housebuilder , whose shares jumped last week after a merger approach from rival .

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Concerns about rising prices have also leapt with 60% of fund managers expect core inflation to rise in the next 12 months - compared to 7% in April. This prompts predictions of higher bond yields with a staggering 80% of investors expecting long-term rates to increase in the next 12 months.

David Bowers, independent consultant at Merrill Lynch, said: ‘Evidence is pointing to a possible sell off in bonds as inflation worries mount,’ he says: ‘A sharp rise in bond yields could help convert this financial crisis into an economic crisis.’

Eurozone investors remain enthusiastic on the commodity trade. Oil and gas, seen as inflation proof, extended its position as Europe’s favourite sector with 41% of investors - an increase of 20% from April.

Karen Olney, chief European strategist at Merrill Lynch, said the need for commodities in developing markets, not labour, are scarce resources in a slow down - bringing with it pricing power. She says: ‘Earnings momentum drives-out performance - not value.’

The other three biggest movers in popularity were chemicals, construction and the industrials with losers being anything linked to the credit binge and/or reliant on the overstretched Anglo-Saxon consumer.

In the UK, cash remained king with managers continuing to hold record amounts on the sidelines. Only 7% of managers now see the UK market as undervalued, compared with 53% two months ago. Following the trend, UK managers no longer saw outlook for growth as the main problem with only 60% now believing the economy will weaken in the year ahead - down 12% from last year. Rather, concerns lie with the impact of higher oil prices and weaker sterling on inflation.

Continuing worries about the UK banks sector has prompted a switch to oil stocks. Last month a quarter of UK investors said banks were undervalued - that number now has fallen to zero. Olney said: ‘Banks are being penalised for earnings decay. While still unloved, this month they are no longer seen as cheap.’

Banks in crisis

The Merrill Lynch survey included 191 fund managers around the world who between them managed a total of about 315bn in assets.

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Concerns about rising prices have also leapt with 60% of fund managers expect core inflation to rise in the next 12 months - compared to 7% in April. This prompts predictions of higher bond yields with a staggering 80% of investors expecting long-term rates to increase in the next 12 months.

David Bowers, independent consultant at Merrill Lynch, said: ‘Evidence is pointing to a possible sell off in bonds as inflation worries mount,’ he says: ‘A sharp rise in bond yields could help convert this financial crisis into an economic crisis.’

Eurozone investors remain enthusiastic on the commodity trade. Oil and gas, seen as inflation proof, extended its position as Europe’s favourite sector with 41% of investors - an increase of 20% from April.

Karen Olney, chief European strategist at Merrill Lynch, said the need for commodities in developing markets, not labour, are scarce resources in a slow down - bringing with it pricing power. She says: ‘Earnings momentum drives-out performance - not value.’

The other three biggest movers in popularity were chemicals, construction and the industrials with losers being anything linked to the credit binge and/or reliant on the overstretched Anglo-Saxon consumer.

In the UK, cash remained king with managers continuing to hold record amounts on the sidelines. Only 7% of managers now see the UK market as undervalued, compared with 53% two months ago. Following the trend, UK managers no longer saw outlook for growth as the main problem with only 60% now believing the economy will weaken in the year ahead - down 12% from last year. Rather, concerns lie with the impact of higher oil prices and weaker sterling on inflation.

Continuing worries about the UK banks sector has prompted a switch to oil stocks. Last month a quarter of UK investors said banks were undervalued - that number now has fallen to zero. Olney said: ‘Banks are being penalised for earnings decay. While still unloved, this month they are no longer seen as cheap.’

Banks in crisis

The Merrill Lynch survey included 191 fund managers around the world who between them managed a total of about 315bn in assets.

Other stories:
Should you take up B&B rights issue?
Beware dangers of these ’safe havens’ for your cash
Is it time to buy bank shares?
Warren Buffett tips South Korea
Invesco axes below-par investment funds
Win the investment marathon
Market report: Wednesday latest
Newspaper and magazine share tips
Fund Focus: Jupiter Merlin Income
Share tips: Sunday round-up

Private health firm Bupa is set to buy a controlling stake in DCA, its first acquisition in the elderly care sector in Australia, a market it has been targeting for growth - FT

UK oil services company, , is in talks with private equity group about a possible takeover - FT

Chairman of Ernst and Young, Mark Otty, says growth at the accountancy business will increasing be driven by - FT

The British Retail Consortium calls on the Bank of England to cut interest rates to boost consumer confidence - The Independent

Independent music labels are livid over the decision by the European Commission to approve the 2004 merger of Sony and BMG, complaining that the deal stifled competition - The Independent

internal review will include details of extensive redundancies across the group and the removal of layers of the management - Times

Siemens could face strike action from thousands of British workers over plans to close its pension scheme - Times

Sir Philip Green will work without a franchise for Topshop’s US expansion after he fails to find a viable partner - Times

Two of Merrill Lynch’s most senior bankers have left the business following the US sub-prime housing crisis - Daily Telegraph

Retail giant Wal-Mart clears final regulatory hurdle that will allow it to open bank branches in Mexico - Daily Telegraph

will introduce a smaller version of its Zune digital music player to lure customers away from Apple’s iPod - Daily Telegraph

O2 will launch its residential broadband service this month in a bid to attract customers nearing the end of their free trials with rivals - The Guardian

Brussels considers plans to increase control over the credit-rating agencies used by lenders, attempting to reduce the chances of another credit market crisis - The Guardian

Visa will appeal the 7m fine it received from the European Commission which ruled that the credit card operator has broken the law by stopping American bank Morgan Stanley from joining its network - The Guardian

And don’t miss the latest in-depth City news of thisismoney.co.uk, the Evening Standard and the Daily Mail…

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Sir Philip Green has increased the market share in womenswear of his Topshop-to-Bhs empire more than any other retailer in the past 12 months. And the upswing in sales at his stores has put him within striking distance of sector leader Marks & Spencer.

The figures show that the combined group of Bhs and Arcadia, which includes Dorothy Perkins, Topshop, Miss Selfridge and Wallis, boosted their share of spending on women’s clothing from 10.1% to 11.1% in the year to March 2.

That compares with a virtually static M&S at just under 12 per cent. Green’s outperformance could not come at a worse time for the High Street giant.

His old sparring partner Sir Stuart Rose, chief executive of M&S, has found himself increasingly beleaguered after a series of unfortunate events that began with a disappointing Christmas statement followed by a mishandled bid to install himself as executive chairman.

Then last week Rose faced renewed criticism for investing in the Lucky Voice karaoke chain founded by Martha Lane Fox, an independent director at M&S.

The Association of British Insurers, which represents some leading City investors, said the investment may represent a conflict of interests.

By contrast, Green, who has twice tried to buy M&S and was rebuffed by Rose in 2004, is on a roll.

The appointment of Kate Moss to oversee the design of her own range, launched on May 1 last year, has helped raise the profile of the Topshop chain. The ‘Kate Moss Effect’ has been a big draw for shoppers.

Green has also embarked on a refurbishment programme at Bhs and by the end of next month will have revamped 35 of the 185 outlets.

Green told Financial Mail that the figures may simply reflect modest growth in a market that has struggled to grow over the past year during a poor summer and a highly competitive Christmas. ‘I’ve not noticed sales going up that much, but other people may be down,’ said Green. ‘The market is pretty tough at the moment.’

Many fashion retailers had to discount heavily over Christmas to clear stock while costs have been on the rise.

Green said that over the past four weeks, which should have kick-started the summer selling season, the High Street has been like a ‘graveyard’.

SUCCESSFUL: Sir Philip Green and Kate Moss

Retailers last week were falling over each other to challenge what appeared to be hugely optimistic High Street sales figures produced by the Office for National Statistics, which estimated that sales had grown 5.6% in the first quarter. ‘Did they start off by saying “Once upon a time…”?’ asked Green.

Several women’s clothing retailers and footwear chains, including Select Retail, Ethel Austin, Dolcis and Stead & Simpson, have fallen into administration this year. Together the firms account for almost 1,000 stores.

Meanwhile, Icelandic firm Baugur put its MK One chain up for sale this month amid fears it may be struggling, while JJB Sport announced that it would close more than 70 shops. Some analysts believe the clothing market may shrink by 2.5% this year - a landmark drop after a series of bumper years.

They say the bad news for the sector isn’t over yet and expect more victims of the High Street slowdown to emerge.

Those who want to survive would be well advised to keep one eye on Green. He may have failed to acquire M&S, but if he can repeat the market share trick he appears to have pulled off in the past 12 months, Green could be on the point of becoming the largest womenswear retailer in the country.

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