The vote concludes an uncertain period for the embattled trust, which has faced severe criticism from analysts and shareholders over its proposed $440m music catalogue sale and for axing its dividend.
The outcome follows the resignation of directors Andrew Wilkinson and Paul Burger on Wednesday (25 October). Chair Andrew Sutch, who is due to step down next year, ceased to be director after the conclusion of the AGM, as his re-appointment vote did not pass.
As a result of failing the continuation vote, the board will put forward proposals for the reconstruction, reorganisation or winding-up of the trust to shareholders for their approval within six months following the date of today's AGM.
Hipgnosis Songs fails to attract superior offer for music catalogue sale
"These proposals may or may not involve winding-up the company or liquidating all or part of the company's existing portfolio of investments," the board said.
According to the AGM results, 83.2% of votes cast were against the continuation of Hipgnosis for another five years, which meant the $440m music catalogue sale would not proceed, while 71.5% of votes cast were against directors re-election.
Sylvia Coleman, senior independent director, said: "The board and the investment adviser have each engaged widely with investors over recent months. While shareholders have not supported our proposed transaction or the continuation vote, it is clear that they share our belief in the inherent quality and potential of these assets.
"The directors are now expediting the appointment of a new chair who will drive the strategic review we have already announced, with a clear focus on delivering improved shareholder value."
All of the other resolutions, including the trust's 2023 annual report, the appointment and remuneration of the auditors, and the approval of dividend policy, were passed, although 17.4% of votes cast rejected the directors' remuneration.
The special resolution for the trust to spend up to $180m in buying its own shares also passed with over 90% of the vote, as did the special resolution to issue ordinary shares issued on a non pre-emptive basis.
The result is good news for Asset Value Investors, a SONG shareholder, which publicly raised concerns about the proposed sale and urged fellow investors to vote against continuation.
Asset Value Investors urges Hipgnosis shareholders to vote against continuation
Another shareholder, Metage Capital, also publicly said it would vote against continuation and called for the removal of Andrew Wilkinson, Andrew Sutch and Paul Burger.
In a statement to Investment Week, AVI head of research Tom Treanor said: "Shareholders have spoken and sent a clear message that the status quo is unacceptable and that a total reset is required. We look forward to a refreshed board working closely with shareholders to turn the company around."
Tom Sharp, CIO at Metage Capital, added: "It was good to see such an emphatic statement from shareholders wanting to see better governance at Hipgnosis Songs Fund. We look forward to a reinvigorated board working to bring the company's iconic songs to the widest possible audience."