Shareholder Rights Campaign

Guaranteed Rights for Shareholders  

Retail investors deserve the same access, transparency, and influence as any other shareholder. This long-running campaign is central to ShareSoc’s mission: ensuring that all investors – including those holding shares via nominee platforms – can vote, attend meetings, and receive company information. As markets modernise, we’re pushing for a regulatory framework that protects shareholder democracy.

Index

1. Latest Update
2. Background & campaign details
3. Our petition
4. Write to your MP
5. Financial Support
6. Previous campaign updates

Latest Update

Update November 2024
In a follow-up email to their meeting with Sir Douglas Flint and the Digitisation Taskforce, ShareSoc, UKSA, and ShareAction have voiced strong concerns about the protection of shareholder rights in the face of increasing digitisation. While supporting modernisation, they emphasize the need to reverse the erosion of individual shareholder stewardship caused by nominee platforms. The organisations are calling for a mandatory base level of service that upholds all shareholder rights as enshrined in the Companies Act 2006, ensuring that these rights are not undermined or subject to excessive fees. They argue that digitisation offers a unique opportunity to restore and enhance shareholder engagement and urge the Taskforce to ensure equivalent rights for intermediated and direct shareholders

Update 18th March 2024
ShareSoc has published a position paper and sent copies to Sir Douglas Flint’s Digitisation Taskforce, HM Treasury and Department for Business and Trade.

Update 8th November 2023
Sir Douglas Flint’s Digitisation Taskforce released its interim report on 10th July 2023. In a joint response ShareSoc and UKSA expressed their extreme concern about the recommendations contained in the interim report. We believe that the recommendations, if adopted, will further diminish rather than enhance shareholder rights. As well as signing our petition, below, if you have not already done so, we now urge you to also write to your MP to express your concern. We have prepared a template letter that you can use and adapt as you wish.

Background to our Campaign

Shareholders Disenfranchised

At present most private investors purchase shares in nominee accounts. With a very few exceptions this means that they have no automatic rights to vote, to attend General Meetings of companies or even receive information on the affairs of the company. The nominee system disenfranchises the vast majority of private shareholders. 

Commercial Interests have taken Precedence

This situation has arisen because the nominee system offers certain commercial attractions to stockbrokers and other financial market intermediaries, and because  the Government has not given priority to the protection of  the rights of individual investors.

Rights not Exercisable

Although in theory investors via nominee accounts have rights to vote, attend meetings and receive information under the Companies Act, those rights are in practice not exercisable, and are not exercised, by the vast majority of private investors. In addition many rights that are otherwise available to shareholders who are on the register of a company are lost.

Shareholder Democracy Destroyed

Shareholder democracy has been fatally undermined by the historic changes to the way the UK stock market operates to the detriment of good corporate governance in companies as the voice of individual shareholders is lost. Individual shareholders have a direct ownership interest rather than simply acting as agents for others as is the case with many institutional investors, so they are more likely to express concerns about management failings, excessive director pay and poor corporate governance.

You can get a verbal explanation from Roger Lawson of why shareholder rights are important and what needs to be done to improve the current situation by clicking on the YouTube video below.

A meeting was held on the 14th October 2014 to promote this campaign and several speakers explained how and why the current situation has come to pass. ShareSoc presented our conclusions on how it should be rectified. Speakers at the meeting were Stan Grierson and Roger Lawson from ShareSoc, Peter Swabey from ICSA, John Lee (Lord Lee of Trafford, a well known FT writer and private investor), John Kay (author of the Kay Review and FT writer), Paul Scott a well know private investor and blogger, Cas Sydorowitz from Georgesons and Michael Kempe from Capita representing the ICSA Registrars Group. A report of the meeting is present in this document: Shareholder-Rights-Meeting-Report. There was a general consensus of both the speakers and the audience that there are numerous problems with the existing nominee system and with dematerialisation looming it was necessary to devise new arrangements.

DOWNLOAD THE FULL ANALYSES

We have published two lengthy documents that contain a complete analysis of the issues on shareholder rights and how to resolve the problems. These can be downloaded from here: Guaranteed-Votes  and Reforming-UK-Share-Ownership (click on to access). Cover photos are above. A summary of our proposals was contained in this press release: Press063 . It includes support for a new low cost electronic trading facility to meet the CSDR regulations that should be available to everyone, and ways to ensure that everyone is on the share register of companies and hence get full rights.

Current Suppression of Shareholder Democracy

Examples of how the existing share holding arrangements defeat shareholder democracy and rights were given in this blog post in July 2015: Defeating-shareholder-democracy

In January 2016 the Government BIS Department published a Research Paper entitled “Exploring the Intermediated Shareholding Model”. It explains the mind-boggling complexity of the existing UK share registration models and the underlying systems that support shareholder rights (including voting). It demonstrates perfectly the need for reform. This note gave our comments on that Paper: BIS-Paper-Shareholding-Model

Sign the Petition

The original ShareSoc Shareholder Rights petition was created to support the changes required to enfranchise all shareholders.

When you sign the ShareSoc petition, you will be registered as a member of ShareSoc (if you are not already a member), whether free (Associate) or as a Full member. Your personal data will be held securely and confidentially, in accordance with our privacy policy.

Write to Your M.P.

We urge supporters of this campaign to write to your Member of Parliament or any members of the House of Lords you may know. If you don’t know who your M.P. is you can find out by going to this web page: www.parliament.uk/business/commons (enter your postcode in the box on the right) which also gives you their contact information. A template letter is present here, but such letters are most effective if you personalise them in some way with your own comments so that it really grabs their attention! You could include past negative experiences associated with nominee accounts for example.

Please Support this Campaign Financially

Note that to make this an effective campaign we do need to spend money on it. ShareSoc has been contributing its own funds to this campaign, particularly to cover some of the initial launch costs, but we do need further funding to make this a high impact and successful campaign. Please use the form below to make a voluntary contribution via any debit or credit cards. Note that any funds contributed specifically to this campaign will be recorded separately and will only be spent on this campaign or otherwise to promote the rights or interests of individual shareholders if the campaign itself is subsequently terminated. You can also donate by cheque or by other means if you prefer – call 0333 200 1595 (a national call rate number, not a premium number) for assistance on that.

Previous Campaign Updates

Update 6 April 2023 
Marks & Spencer recently launched the ‘Share Your Voice’ campaign, which shares many objectives with our Shareholder Rights Campaign and we encouraged supporters of our campaign to sign the associated parliamentary petition and spread the word about it. ShareSoc has also published a recent News item that explains why we chose to support the petition, its benefits and where we differ in our position on certain aspects (mainly a strong preference for Hybrid AGMs vs totally digital ones). 

Update 10 August 2022
Sir Douglas Flint has been appointed by the Chancellor to head the Digitisation Taskforce. We are very pleased at this progress. His appointment was one of the recommendations of the Secondary Markets Fund Raising Review published on 26 July:

• this recommended significant changes to the nominee system and dematerialisation, which we lobbied for during this review and previously to BEIS, Law Commission and others. After years of disenfranchisement of individual investors who beneficially own shares via nominees, real progress is looking much more likely.
• we are also hopeful individual investors will gain access to all placings on fair terms.

Update 21 March 2020
In 2019, after much lobbying, the Law Commission launched its Review of Intermediated Securities. Peter Parry and Cliff Weight are on the advisory panel.

ShareSoc-UKSA submitted a joint response on behalf of individual investors, on 5 Nov 2019.
The key points we made were:

• Communication by email rather than by post is now the norm and assumed as the default position. Printing annual reports and shareholder circulars and sending them to shareholders by post is no longer necessary. Postage and printing costs were some of the key drivers of the nominee system. A modern system of intermediated securities should embrace and recognise modern technology and ensure the costs savings available are achieved and shared with the beneficial investors.
• The current computerised processes mirror the old days of paper settlement and are no longer fit for purpose. It is time for a new approach, based on the administrative streamlining that modern technology can offer, with a simple ownership model directly linking companies and their ultimate investors.
• We are moving towards Dematerialisation in 2023. This will require change and is the ideal opportunity to reform the way shares are owned in the UK and ensure all individual “shareholders” have their shareholder rights restored.
• Our preferred approach is for individual investors to hold their shares directly (i.e. in their own names) on an electronic register.

Our full response is here Law Commission Response from ShareSoc-UKSA

Click here to read The Law Commission Call for Evidence

The sorry saga at Sirius Minerals highlighted the problems of intermediated securities and the nominee structure and we wrote to the Government highlighting this and received a reply. https://www.sharesoc.org/blog/nominee-accounts/shareholder-rights-response-from-kelly-tolhurst-beis-minister/ plus one from the Law Commissioner, see https://www.sharesoc.org/blog/shareholder-democracy/shareholder-rights-positive-noises-from-law-commission-re-nominees-and-sirius-problems/

In May 2018 we wrote to BEIS: click here for a copy of our joint letter from UKSA and ShareSoc to BEIS about SRD II.

We asked members to write to their MP requesting that Government implement the Shareholder Rights Directive’s clear intent that the end investor should be identified on the company register and many did, which helped our campaign get noticed.

Our third initiative was (and still is) to ask a co-ordinated series of questions at company AGMs. All companies should want to communicate and better engage with their shareholders so it will be difficult for them not to agree with our goal.

Other steps in our campaign will be further meetings with BEIS, Government, FCA, etc; publicity via media; and contacting platforms and registrars to ask them to voluntarily agree to improve their systems, processes and service to individual investors.

The suggested AGM question is as follows:

Please can you tell me what percentage of your shares are held by individual investors?
And do you know what percentage of these individuals have voted at this AGM by proxy?
Can you tell me what percentage of your individual shareholders do not get to see your annual report, and do not get notification of the AGM or voting forms?

Will you support me and ShareSoc, the UK Individual Shareholders Society, in lobbying the UK government to put the end investor’s name and email address on the shareholder register, so that you can more easily communicate with your shareholders?