Voting at Annual General Metings is a key shareholder right and is one of the ways that retail investors can influence corporate governance and executive decision making.

1. What is proxy voting?

Proxy voting is a mechanism that allows shareholders to vote on corporate matters without being physically present at the meeting. This ensures that all shareholders have a say in important decisions, even if they cannot attend the Annual General Meeting or other shareholder meetings.

Proxy voting is particularly important for retail investors, as nominee ownership structures within trading platforms mean that they are not necessarily a direct share owner of a company. This means that even retail investors that attend an Annual General Meeting might not be able to vote if they own their shares via a trading platform, or any other nominee account. Therefore, proxy voting technologies can enable retail investors to have their vote at meetings despite not having the same access as a direct share certificate holder.

2. Who is involved in proxy voting?

Several parties are involved in the proxy voting process:

• Shareholder (You): The owner of the shares who provides voting instructions.

• Proxy: The person or entity appointed to vote on behalf of the shareholder. This could be a trusted individual, your broker, another shareholder, or a professional proxy service.

• Company: The entity holding the meeting and setting the agenda items for voting.

• Trading Platform: The intermediary that facilitates the process of proxy voting for retail investors.

• Nominee Accounts and Beneficial Ownership: Many retail investors hold their shares through nominee ownership accounts provided by trading platforms. Often in these accounts, the trading platform (nominee) is the registered owner of the shares, but you are the beneficial owner, meaning you enjoy the benefits of ownership, such as dividends and voting rights.

3. Do retail investors have the right to proxy vote?

Yes, retail investors in the UK have the shareholder right to proxy vote. This right is protected under the Companies Act 2006, which ensures that all shareholders, regardless of the size of their holdings, can participate in proxy voting.

As a retail investor, you can vote on a range of issues, including:

• Election of directors

• Approval of financial statements

• Decisions on mergers and acquisitions

• Changes to company policies

• Executive compensation

• Environmental, Social and Governance (ESG) strategy

It is important to learn the context around the resolutions you are voting on. Root Engage enables you to access simplified summaries of the resolutions being put forward at Annual General Meetings at the companies you invest in.

4. How does proxy voting work on trading platforms?

Historically the nominee ownership structures utilised by trading platforms can make it hard for retail investors to access shareholder rights such as proxy voting. However, in recent years some trading platforms have streamlined the proxy voting process, making it accessible and straightforward for their retail investor users. Here’s how it typically works:

Notification email:

You will receive a notification from your trading platform about an upcoming Annual General Meeting, normally by email. This notification will include details about the meeting and the deadline for submitting your proxy vote.

Learn the context:

In some cases the trading platform may link you to information that contextualises the resolutions being voted on, such as proxy forms or the annual report. However, in most cases retail investors get little to no information on the resolutions being voted on. In order to better understand these resolutions you can use the Root Engage platform, which provides simplified information surrounding Annual General Meetings and the topics being voted on.

Submit your vote:

You can select your voting preferences for each agenda item. You may have options like "For," "Against," or "Abstain" for each proposal. Once you’ve made your selections, submit your vote through the provided interface.

Not all trading platforms offer a proxy voting service, especially those operating beyond the US and UK. Root has put together a handy guide on how the proxy voting process works on some of the biggest trading platforms in the UK.

In Summary

Proxy voting is a powerful tool that enables retail investors to participate in corporate governance without being physically present at meetings. By understanding and using proxy voting, you can ensure your voice is heard in the decisions that impact your investments. Trading platforms, supplemented by solutions like Root Engage, have made the shareholder engagement process easier than ever before, allowing you to stay informed.

Disclaimer

This article is for informational purposes only and does not constitute legal, financial, or investment advice. The information provided may not be comprehensive or up-to-date. Readers should conduct their own research and consult with a qualified financial adviser or legal professional before making any investment decisions. The author and publisher are not liable for any actions taken based on the information provided in this article.