PRESS RELEASE 54 (30/01/2014)
Nominee system defeats shareholder voting
ShareSoc has recently issued a survey to our Members and the public covering their voting and attendance at General Meetings and the prevalence of the use of nominee accounts. The results demonstrate that the nominee account system undermines shareholders’ ability to vote at the General Meetings of the companies they own.
Nominee accounts are now the commonest form in which investors hold shares in companies (89% of ShareSoc Members held some shares in a nominee account, as opposed to the use of Personal Crest accounts or paper share certificates).
When shares are held directly, only 7% of our Members never bother to submit a proxy voting form. But for those shares held in nominee accounts the number rose to 42%. Public respondents (i.e. non Members) were even less likely to vote their shares.
Investors not enfranchised. The reason for these low numbers is primarily that only 18% are actually given information and voting rights by their stockbroker or platform operator. Indeed only 38% of our Members and 31% of Public respondents were aware that the ISA regulations required nominee operators to provide voting rights.
Investors also feel disenfranchised. 74% of our Members and 70% of the Public confirmed that they felt disenfranchised by the existing nominee system and proxy voting arrangements.
There were also a large number of individual comments on the difficulties of voting, particularly where nominee accounts were in use –
Summary. The results of this survey demonstrate that the nominee account system dramatically reduces the number of investors who submit proxy voting forms for the companies in which they hold shares. Even among ShareSoc Members, who are more likely to understand how to exercise such votes, they are often unable to do so because only a small minority use a broker who provides information and voting rights. There is also general ignorance of the obligation of ISA operators to provide voting rights.
The results from this survey will be used in the ShareSoc Shareholder Rights campaign which is under development.
Please contact ShareSoc if you require more information on the questions posed in these surveys and the details of the responses.
For further information, please contact:
Roger W. Lawson,
Or; Stan Grierson, ShareSoc
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