What is Proxy Voting?

A Guide for UK Retail Investors

14 Jun 2024

As a shareholder voting at general meetings is one of your key legal rights and is one of the few ways you can influence corporate decisions.

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 (AGM) or other shareholder meetings.

Proxy voting is particularly important for retail investors, as due to the complexity of nominee ownership structures meaning that they are not actually a direct share owner of a company. Therefore, proxy voting is a mechanism that enables 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 accounts provided by trading platforms. 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 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 corporate governance.

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

4. How Does Proxy Voting Work on Trading Platforms?

In some cases trading platforms have streamlined the proxy voting process, making it accessible and straightforward for retail investors. Here’s how it typically works:

Notifications: You will receive a notification from your trading platform about an upcoming AGM or shareholder meeting, normally by email. This notification will include details about the meeting, the agenda items, and the deadline for submitting your proxy vote.

Submitting Your Vote: 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 platform.

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.

Conclusion

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 this process easier than ever, allowing you to stay engaged and informed from anywhere.

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.

As a shareholder voting at general meetings is one of your key legal rights and is one of the few ways you can influence corporate decisions.

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 (AGM) or other shareholder meetings.

Proxy voting is particularly important for retail investors, as due to the complexity of nominee ownership structures meaning that they are not actually a direct share owner of a company. Therefore, proxy voting is a mechanism that enables 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 accounts provided by trading platforms. 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 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 corporate governance.

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

4. How Does Proxy Voting Work on Trading Platforms?

In some cases trading platforms have streamlined the proxy voting process, making it accessible and straightforward for retail investors. Here’s how it typically works:

Notifications: You will receive a notification from your trading platform about an upcoming AGM or shareholder meeting, normally by email. This notification will include details about the meeting, the agenda items, and the deadline for submitting your proxy vote.

Submitting Your Vote: 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 platform.

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.

Conclusion

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 this process easier than ever, allowing you to stay engaged and informed from anywhere.

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.

As a shareholder voting at general meetings is one of your key legal rights and is one of the few ways you can influence corporate decisions.

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 (AGM) or other shareholder meetings.

Proxy voting is particularly important for retail investors, as due to the complexity of nominee ownership structures meaning that they are not actually a direct share owner of a company. Therefore, proxy voting is a mechanism that enables 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 accounts provided by trading platforms. 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 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 corporate governance.

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

4. How Does Proxy Voting Work on Trading Platforms?

In some cases trading platforms have streamlined the proxy voting process, making it accessible and straightforward for retail investors. Here’s how it typically works:

Notifications: You will receive a notification from your trading platform about an upcoming AGM or shareholder meeting, normally by email. This notification will include details about the meeting, the agenda items, and the deadline for submitting your proxy vote.

Submitting Your Vote: 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 platform.

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.

Conclusion

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 this process easier than ever, allowing you to stay engaged and informed from anywhere.

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.

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© 2024 – All Rights Reserved - Root

© 2024 – All Rights Reserved - Root

© 2024 – All Rights Reserved - Root