Shareholders Shedding Voices - Express Your Considerations

Individual investors are increasingly losing their voices (via proxy or directly) in crucial shareholder voting matters. The cause for this under-representation has nothing to do with anything as exciting as deceptive business practices or secret votes. It is just that fewer individual shareholders are deciding to return their proxies.

This lack of return produces lots of dilemmas for companies that want to proceed with the voting process.

After all, for voting to occur it is necessary to reach a quorum, which is the number of shareholder and/or proxy votes that are needed to conduct business (normally a majority of the shareholders). If a quorum can't be reached resulting from lack of votes, then many times the Ten-Day Rule may be utilized.

The Ten-Day Rule permits brokers to vote proxies for shareholders who have not turned in their votes ten days before a meeting at which voting is going to take place. This rule may only be applied to routine matters, which presents an ambiguity that is swiftly becoming defined and amended.

Non-routine issues from equity capital markets such as emerging capital from equity capital market plans must be voted on by shareholders. Soon there might be Election Contest Rules enacted that would demand shareholders, not brokers to vote in debatable director elections or when there's a recommendation for an Election Contest as well.

Serious problems for businesses are triggered when individual proxies aren't returned and the Ten-Day Rule is not applicable. Individual investors and brokers both tend to vote on behalf of the company management, but institutional investors do not often have the management's interest in mind.

They do however always return their proxies. This could give them over-representation in the voting processes and unfair control of the business.

Why the indifference to voting amongst individual investors?

Many could find the wording of the ballots filled with industry terms and difficult to fully grasp. Several may think that other people would do the job for them. The reasons for not sending in proxies are as unique as the individual shareholders themselves.

How to Improve Proxy Returns

What may be carried out to inspire individual investors to vote on their behalf? Well thought-out correspondence and educational campaigns designed to call shareholders to action might help.

This matter is obviously crucial to the future of companies because when an individual investors votes aren't returned, their voices are lost and other individuals are heard in their spot.

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