Investors Losing Their Voices - Express Your Issues

Individual investors are gradually losing their voices (via proxy or in person) in crucial shareholder voting matters. The reason for this under-representation has nothing to do with anything as exciting as deceptive company 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 firms that wish to proceed with the voting process.

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

The Ten-Day Rule allows brokers to vote proxies for shareholders who have not turned in their votes 10 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 may be quickly being defined and amended.

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

Really serious problems for businesses are caused when individual proxies are not returned and the Ten-Day Rule is not applicable. Individual investors and brokers both tend to vote on behalf of the company administration, 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 within the voting processes and unfair control of the companies.

Why the indifference to voting among individual investors?

Many could find the wording of the ballots filled with business terminology and difficult to fully grasp. Several might believe that others would do the job for them. The reasons for not sending in proxies are as unique as the individual shareholders themselves.

Tips on how to Improve Proxy Returns

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

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

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