Shareholders lack confidence to hold companies to account

Large swathes of shareholders are not voting on company resolutions because they do not believe their vote will make a difference, a report has suggested.

The astonishing finding, from a poll conducted among 1,000 investors by The Share Centre, found that some investors were also unaware of their full rights as equity holders.

Of those polled, some 79 per cent said that they do not attend the annual general meetings of the companies in which they invest. A third said that they do not vote on company resolutions, while around six in 10 said they don’t feel their vote makes any difference.

Other reasons for not voting, according to the poll, include difficulties in understanding the voting system and not having sufficient time.

Researchers also probed why some investors fail to attend AGMs. Of those who said they do not, 45 per cent said they don’t think their attendance would result in a change. Nearly two-thirds (60 per cent) said they would be more likely to attend AGMs if they were held in more convenient locations, while just under half (47 per cent) would go if there was an issue about which they felt strongly.

Respondents who said they do see the value in attending AGMs said it was vital to understand how investee companies are functioning. More than two thirds (68 per cent) of those who ordinarily attend AGMs said it was important to gather information on company performance and to vote on company resolutions and the election of directors (50 per cent). More than a third of attendees (36 per cent) said they went to ask questions of the board.

The research also asked shareholders to grade their own understanding of shareholder rights. Just under half of those polled said they were confident in their understanding of ‘some’ of their rights, but acknowledged that they prefer to seek assistance in voting from a third party.

Of all those surveyed, 31 per cent said they fully understood all of their rights and the processes involved as an equity holder. One in five respondents admitted that they don’t have sufficient grasp of their rights as a shareholder.

Last Updated: 14 February 2020