As a retail investor in the UK, you have various shareholder rights and responsibilities. Understanding your shareholder rights in the UK is crucial for making informed decisions, ensuring your portfolio is aligned with your values, and protecting sustainable financial returns.

Root has prepared a quick guide to the key shareholder rights of investors in the UK to foster holistic retail investor relations and an explanation as to how Root Engage can support you exercise your shareholder rights.

1. Right to attend general meetings

The first of your shareholder rights, is your right to attend general meetings of the company you have invested in, including Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs). These meetings are essential as a regular touch point for all investors of any size to discuss significant company matters with the executive team.

Traditionally, any retail investor engagement has been reliant on trading platforms to keep their users updated on these meetings. In some cases, a trading platform will not provide information on these meetings without it being requested, leaving retail investors to do their own research. While trading platforms and brokers are doing more to support proxy voting, they often falter on providing up to date, easily accessible data to their users on when and where Annual General Meetings are happening.

2. Right to vote at general meetings

In addition to attending Annual General Meetings, you have a right to vote on various matters, such as electing directors, approving financial statements and the company's environmental, social and governance (ESG) strategy. Sometimes resolutions are filed as a form of shareholder activism, when there is a disagreement between investors and company management. Often proxy voting is utilised, as a lot of shareholders are unable to attend meetings in person to vote.

Each year companies are required to file meticulously planned and technically worded documents called proxy statements giving context to the issues that are to be voted on. While some trading platforms have made proxy voting much more accessible, in most cases everyday retail investors are unable to access any simplified context to the issues being voted on.

Check out our guide on how to proxy vote on different trading platforms in the UK!

3. Right to receive information

Another of your shareholder rights is to receive timely and accurate information about the company. This includes annual reports, financial statements, and other important communications.

Often your broker will enable you to access these documents pretty easily, though non-professional retail investors will have to go through publicly available information on the company themselves. Institutional investors, on the other hand, have the resources available to buy summaries and advice on how to approach the information companies publish. Root is narrowing this information gap between retail and institutional investors by providing simplified summaries of the resolutions being discussed at annual general meetings.

4. Right to propose shareholder resolutions

A key shareholder right is the ability to propose resolutions to be discussed and voted on at general meetings. This can include matters such as changes to corporate policy on environmental, governance and social (ESG) issues or the appointment of directors. In the UK, a group of 100 shareholders, or those holding at least 5% of the total voting rights can put forward a resolution together to be voted on at a general meeting. Campaigning organisations sometimes propose resolutions, as a form of shareholder activism, to bring certain topics to the attention of listed companies.

Due to the way retail ownership of shares is often structured within nominee accounts, it can be hard to utilise these rights, as you may not have access to a share certificate to prove your ownership.

Other important shareholder rights

In addition to the primary rights listed above, there are several other shareholder rights to be aware of that can be exercised under specific circumstances. These include the right to receive dividends when declared, the right to transfer shares to another party, and the right to sue for wrongdoing if the company’s management acts against shareholders' interests.

How the Root Engage platform can help you

• Get notifications on meetings in your portfolio

• Find out when and where meetings are happening

• Access simplified information on the resolutions being discussed at companies

• Coming soon - direct connection to listed companies

Sign up to the platform today!

Supporting legislation

Understanding the legislative framework that underpins these shareholder rights is important in ensuring they remain protected. The primary legislation which you can explore further includes:

• The Companies Act 2006: This is the principal legislation that governs the rights and responsibilities of shareholders in the UK. It outlines the rights to attend and vote at general meetings, receive information, transfer shares, and propose resolutions.

• The Financial Services and Markets Act 2000: This act provides the framework for the regulation of financial markets and the protection of investors, including provisions for the transfer of shares.

• Future Policy Enhancements: Future policy is expected to enhance shareholder access to rights with the Digitisation Taskforce in the UK and the Shareholder Rights Directive II in the EU.

In summary

Owning shares as a retail investor of any size in the UK comes with a suite of shareholder rights designed to protect your investment and ensure your voice is heard in corporate governance. By understanding and exercising these rights, you can play an active role in the companies you invest in and contribute to their success. As retail investor relations improve at companies there will be more opportunities for shareholder engagement for everyday investors. You can stay informed and proactive in managing your investments by using Root's resources to stay connected with the companies in which you hold shares. Your shareholder rights are a powerful tool in navigating the financial markets and achieving your investment goals.

It’s important to note that these rights are specific to UK shareholders that want to explore retail investor engagement. We will provide more information on shareholder rights in other countries in future articles.

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.