The Alliance Trust saga suggests shareholder power is alive and well.

The Dundee giant believed that the two-thirds of its shares held by small investors were a bulwark against the institutional activism that has often been a potent weapon for change at underperforming investment trusts. But investor patience has already been tried at Alliance. Four years ago in narrowly seeing off the weaker challenge of Laxey Partners, Alliance promised that better performance would start to come through, its discount would narrow, and its subsidiaries would stop draining cash. This time around unfortunately the script has been the same - the assurance that results are starting to come through - and enough shareholders have noticed. Only last week Alliance chairman Karin Forseke warned that importing "non-independent" directors would jeopardise the company. Now she has been forced to welcome them into the tent, under pressure from institutions including Aberdeen which has made no secret of its belief it could do a better job running the £3.6bn fund. Only neighbour DC Thomson was vocal in Alliance's support. The £120,000 a year Ms Forseke now has the task of having to explain the climbdown to those loyal investors who attend the annual meeting expecting to see a confident board, and the ever-bullish £1.34m chief executive Katherine Garrrett-Cox, carrying the day. Alliance has made the mistake of believing that its size, history, and "long-term" mantra confers immunity from the pressures of a fast-moving investment world. The fact that it is a New York hedge fund which has proved otherwise does not mean that all shareholders may not benefit from a fresh external scrutiny of how it is run.