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Alice Ross, FT Deputy Editor, has written a major article about how “Retail shareholders can get organised and can push for change if they band together”.
The article focusses on the successes of the pressure group ShareAction who have successfully used their AGM Army to ask questions at AGMs and lobby for change. However, Cliff Weight and ShareSoc are also quoted at some length.
One problem for retail investor engagement, however, is that the vast majority remain uninvolved. Most do not vote at all on proposals put forward at AGMs by the boards themselves, even when they concern executive pay, a topic which tends to stir emotions.
Cliff Weight, a director at ShareSoc, which represents UK individual shareholders, says that despite owning 28.4 per cent of the UK stock market, “it’s almost impossible” for retail investors to vote at AGMs. Often this is because they own their shares through investment platforms rather than directly, and investment platforms do not always make it straightforward for their clients to educate themselves.
“I think the industry should make it a hell of a lot easier,” Weight says. “It’s a shocking abuse of democracy: we wouldn’t allow it if 20 per cent of the country weren’t allowed to vote in general elections.”
The FT report also covers the Law Commission report, to which ShareSoc contributed.
A report last year from the Law Commission recognised this problem, noting that while so-called intermediated securities made trading a lot quicker and cheaper, they raised issues of transparency and corporate governance. Because end investors, or ‘ultimate’ investors, are not named on the shareholder register of the companies they are invested in, they must rely on their investment platform to help them to vote. One of the report’s proposals is that intermediaries should be obliged to facilitate the exercise of voting rights by their retail investors.