Democracy wouldn’t work without voting, and there are so many campaigns urging you to be active in the next political election. But as far as shareholder democracy is concerned, there’s nowhere near the same level of interest. So, below, we explain how you can exercise your rights as a shareholder to bring about the changes you wish to see in the companies that you’ve invested in.
The current problem with shareholder democracy
One of the biggest issues with shareholder democracy is that many retail investors don’t realise that they can influence policy at corporations. After all, big businesses tend to keep this fact quiet, as they’re preoccupied with answering to the big institutional investors, as was exemplified during the 2020 proxy season. However, retail investors play a crucial role in shareholder democracy. After all, they are part owners of the business, regardless of how small their stock is. But there’s a long way to go if the full potential of shareholder democracy is to be realised. Let’s look at some ways that you can exercise your rights as a shareholder.
Understand the rules of the company
Your first job is to learn if the shares that you hold come with voting rights attached. Some shares don’t have voting rights, while others do, so you need to figure out what shares you currently hold. You can do this by examining the record dates for companies that you hold shares with. It’s possible to find the company’s record date in its publicly released annual meeting notice. It’s important not to miss this date, as it’s a cutoff for shareholders who are eligible for the proxy process.
If you want to submit a proposal to a company, you need to own a certain amount of shares for a defined period of time. For instance, shareholders must continuously hold at least $2,000, $15,000, or $25,000 (for three years, two years, or one year, respectively) in market value of a company’s securities to submit proposals, as stipulated by the US Securities and Exchange Commission. When you’ve noted the record dates, you can add them to your diary to ensure you submit your vote during the upcoming proxy season.
Discover when the AGM is being held
The vast majority of publicly held companies hold an annual general meeting (AGM). It’s during this time that directors and company executives share updates with shareholders relating to profit, directorship, and various other issues regarding the running of the company. During the AGM, eligible shareholders are also invited to vote on proposals, which are typically circulated ahead of time. Although every company is entitled to hold its AGM whenever suitable, most occur during proxy season, which runs between mid-April and mid-June each year. Often, it’s difficult for investors to keep track of the different dates, and the ballots submitted to voters can be confusing and misleading.
Make sure you vote
As is the case with a political election, shareholder democracy only works if people place votes. Today, the number of retail investors is increasing, with around 50% of investors between the ages of 25 and 40 planning to vote at an upcoming AGM. But data from the 2020 proxy season showed that only 28% of investors actually voted at AGMs, highlighting that there’s still a long way to go. Tulipshare actively encourages investors to vote during proxy season and facilitates shareholder activism by launching campaigns that seek to bring about changes in some of the world’s most unethical companies.
If we’re to see the changes that we desire in the world’s largest corporations, shareholder democracy and exercising our right to vote during proxy season are crucial.