The main Annual General Meeting season is now upon us and those investors who hold their shares on the register will have been receiving Annual Reports on paper or electronically. If you hold your shares in a nominee account, some brokers will send you an Annual Report or notify you of when an AGM is coming up. Otherwise you’ll need to monitor company announcements. But the key thing is to VOTE YOUR SHARES.
You are after all a part owner of the company and the votes at an AGM enable you to determine who should be the directors, what they get paid, whether they can issue more shares and many other important aspects. The voting by institutional investors used to be sloppy, but now it is often over 70% while they frequently meet the same difficulties as private investors in actually submitting votes. But private investors are now laggards and need to up their game.
Yes it would help if the shareholding system was reformed (see our Shareholder Rights campaign here for more information on that: https://www.sharesoc.org/campaigns/shareholder-rights-campaign/ ) . But in the meantime here are some tips to assist you:
If you hold a paper share certificate or are a Personal Crest Member then it is easy. You will be sent a paper voting form or can opt in for electronic notification. You can then vote by post or electronically. Incidentally even if most of your shares are held in a nominee account it’s worth holding at least one share on the register because that ensures you will be notified of AGMs and can attend the meeting without question.
If your shares are held in a nominee account, as most are nowadays, then it gets a bit more complicated. In essence you will have to get your nominee operator (stockbroker) to submit your votes on your behalf because they technically own the shares not you (i.e. their name is on the share register). You just have a “beneficial interest” in them. But the voting rights are still yours.
If your shares are held in an ISA account then the ISA rules require that the nominee operator will vote your shares when requested, i.e. they have a legal obligation to do so. The best brokers provide easy electronic systems to enable you to do that. But others will do so upon request. For non-ISA nominee accounts, the legal position is not as clear cut but in general all good brokers will vote your shares when requested.
If you wish to attend the AGM in person then you will also need to ask for a “Letter of Representation” if your shares are in a nominee account.
Now you may find the “Notice of the Annual General Meeting” which lists the resolutions to be voted upon a complex and daunting document at first glance. But in reality most of the resolutions are standard ones that appear every year. However that does not mean that you should vote “Yes” to all of them or blindly follow the directors recommendations. There is a lot of guidance on how to vote at General Meetings on this page of the ShareSoc web site: https://www.sharesoc.org/investor-academy/advanced-topics/general-meetings/voting-general-meetings/
We also provide guidance on attending General Meetings on this web page: https://www.sharesoc.org/investor-academy/advanced-topics/general-meetings/ with a comprehensive document on “How to Run a General Meeting” which you can give to company directors or the Company Secretary if you think the meeting was badly run (and lots are).
These areas may appear complex to new investors but they are worth learning about. Some General Meetings are particularly crucial as regards who is running a company and its future direction; and we all want to control outrageous pay levels that have been appearing in many companies. The votes enable you to do that. One of the key benefits of Full Membership of ShareSoc is that you can phone us up and ask for advice on how to vote and how to attend an AGM. The latter is always worth doing if you can spare the time. But if you cannot attend in person, just make sure YOU GET YOUR VOTE IN.
ShareSoc does sometimes issue general voting recommendations via Press Releases in particularly extreme cases – for example on Persimmon and Alliance Trust recently.
REMEMBER VOTING AT COMPANY GENERAL MEETINGS IS LIKE VOTING AT GENERAL ELECTIONS. IF YOU DON’T VOTE THEN YOU ARE LIKELY TO GET LEADERS WHO YOU DON’T LIKE AND WHO PAY THEMSELVES TOO MUCH. SO SHAREHOLDER DEMOCRACY IS AS IMPORTANT AS POLITICAL DEMOCRACY AND THOSE WHO DON’T VOTE BECAUSE THEY CAN’T BE BOTHERED WILL LIKELY SUFFER THE CONSEQUENCES. SO PLEASE DO VOTE.
Roger Lawson
see https://www.law.ox.ac.uk/business-law-blog/blog/2017/06/managerial-reliance-retail-shareholder-vote-evidence-proxy-delivery
This is interesting, if US-centric. Relevant for our campaign on shareholder rights, dematerialisation debate and why issuers may resist.