Northern Rock shares lost 16% yesterday as rebel investors won a partial victory to curb the power of the beleaguered bank's board.

Almost two-thirds of shareholders (65.9%) succesfully voted to restrict the ability of directors to issue new shares but another resolution to prevent it selling assets, which got even higher backing, failed because it required a 75% majority.

Both measures were proposed by Northern Rock's largest shareholders, hedge funds SRM Global and RAB Capital, who fear directors are vulnerable to political pressure as they seek a rescuer.

However, the board said that the adopted measure would have required shareholder consent anyway and said it would not prove an additional restriction.

Northern Rock shares, which have plummeted more than 85% since September 13, the day before it revealed it had sought emergency funding from the Bank of England, dropped 13.25p to 69.25p.

But investors gave their support to the new heads of the bank. Votes on the appointment of chairman Bryan Sanderson, who was brought in after the resignation of Matt Ridley, and new chief executive Andy Kuipers received more than 90% backing.

Robin Ashby, who is heading the Northern Rock Small Shareholders Group, said the meeting persuaded him to change his vote and back the board.

"It was a very cordial atmosphere, there were a lot of very polite people in there.

"Bryan Sanderson chaired it very well, with a bit of humour as well."

Sanderson said: "Shareholders should be assured that the board of the company will continue towards securing the best possible outcome for shareholders and other stakeholders in the company."

The mortgage lender is due to complete a strategic review by next month.

It has already named Richard Branson's Virgin Money as its preferred buyer but remains in talks with private investment firm Olivant about a rival proposal.

However, there are worries that tough credit markets mean the bidders could struggle to raise enough funds to repay the £25bn that Northern Rock has received in emergency loans. This could lead to the bank being nationalised.

Chancellor of the Exchequer Alistair Darling reiterated yesterday that he would prefer a private sector solution.

However, he added: "Our objectives are to protect the interests of taxpayers and depositors."

The government has already lined up former Lloyd's of London senior executive Ron Sandler to run the bank in the event it is taken under state control.

European Union restrictions on state aid mean a deal must be reached for Northern Rock by mid-February.