Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Engaging with companies via AGMs, investor events and more
In previous parts of this First-Time Investor series we have talked about how shareholders should consider themselves as a part owner of a business.
By owning shares in a company, you have a voice and there are various ways you can engage with a business you are invested in.
It is easier for big institutional investors to engage with firms than it is for retail investors, however that doesn’t mean you shouldn’t try too.
It is important to take advantage of the opportunities available to you. Go to annual general meetings (AGMs) if you can (or watch online) and if you are invested in smaller companies you may even find management will respond if you get in touch directly on an issue which exercises you.
Examples of key resolutions at an AGM
– To receive the report and accounts
– To declare a dividend
– Election/re-election of directors
– Authority to allot shares
– To approve the remuneration policy and report
Above are some of the main resolutions which are typically put to a vote at an AGM – though AIM firms do not, for example, have to put remuneration to a vote. This is important as shareholder opposition is often concentrated on pay, particularly when it is perceived that the awards for directors are excessive.
In September 2020, 34.2% of shareholders voted against the pay policies at Ryanair (RYA) at its AGM after CEO Michael O’Leary received a €458,000 bonus despite a major crisis in the aviation sector.
Cases where a majority of shareholders vote to reject a pay package are rare.
In addition, smaller companies often give presentations at private investor conferences and internet webinars, many of which you can sign up for free. For example, you can find details of upcoming events run by Shares here.
These events can be extremely useful as you hear directly from the businesses themselves and can get the inside track on how a company is performing and executing on its strategy. You may even have an opportunity to quiz key directors yourself.
A ‘SLIGHT WRINKLE’
There is a slight wrinkle with AGMs and EGMs. Only people listed on the share register are ensured of the right to attend general meetings and vote on resolutions and only those who hold their shares in paper certificate form or through Crest personal membership will be listed on the register; Crest being the depository for the UK’s electronic share holdings.
If you instead hold shares in the nominee account of an investment platform then you are not on the share register (the platform is instead) and nor are you a member, you are simply a beneficial owner of the shares.
As such your presence at general meetings is not assured and you will not necessarily be able to vote, although most platforms will facilitate both and you should be able to vote by proxy if you cannot attend in person.
If you do want to attend in person you will need a letter of representation which you can request from your platform. It’s also worth remembering that you may need to allow some time for such a request to be processed.
What are EGMs?
An EGM or extraordinary general meeting refers to a shareholder meeting called outside of an AGM to deal with important matters that cannot wait until the next annual event.
Typically, they relate to items like mergers and acquisition activity or changes to a company’s structure or stock market listing. They can also be requisitioned by major shareholders, often if they want to remove incumbent directors and/or appoint other directors to the board.
MOVING IN A DIGITAL DIRECTION
Going to an AGM can be tricky when a company’s registered office is outside the UK, however one side effect of the 2020 coronavirus pandemic was that businesses were forced to conduct virtual meetings and hopefully a digital element will be maintained in the future to give all shareholders the option of participating.
Not everyone will have the time and inclination to attend AGMs or investor events but if you can catch up and vote in proxy online then there is a strong argument for taking your interests as a shareholder into your own hands.
Another way that companies look to engage with shareholders, particularly when they are planning to revamp or update their strategy, is to conduct what are typically called capital markets days.
Quite often these will be restricted to institutional investors but some companies, particularly larger ones, may allow you to stream or catch up on presentations through their website.
Also, market-sensitive information discussed at these events will have to be disclosed separately in advance through a regulatory announcement.