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

This lack of return creates numerous dilemmas for businesses that want to proceed with the voting process.

After all, for voting to happen it truly is necessary to reach a quorum, that is the number of shareholder and/or proxy votes that are required to conduct business (typically a majority of the shareholders). If a quorum cannot be reached because of lack of votes, then many occasions the Ten-Day Rule may be utilized.

The Ten-Day Rule makes it possible for brokers to vote proxies for investors that have not turned in their votes ten days prior to a meeting at which voting will take place. This rule can only be applied to routine matters, which offers an ambiguity that's swiftly becoming defined and amended.

Non-routine challenges from equity capital markets which include emerging capital from equity capital market plans must be voted on by shareholders. Soon there may be Election Contest Rules enacted that would require shareholders, not brokers to vote in controversial director elections or when there is a recommendation for an Election Contest as well.

Significant problems for businesses are triggered when individual proxies aren't returned and the Ten-Day Rule just isn't applicable. Individual investors and brokers both have a tendency to vote on behalf of the company management, but institutional investors don't always have the management's best interest in mind.

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

Why the indifference to voting amongst individual investors?

Many may find the terminology of the ballots filled with industry lingo and hard to understand. Some might think that other individuals would do the job for them. The factors for not sending in proxies are as distinctive as the individual shareholders themselves.

How to Improve Proxy Returns

What can be done to encourage individual investors to vote on their behalf? Well thought-out communication and educational campaigns developed to call shareholders to action might help.

This matter is certainly crucial to the future of businesses mainly because when an individual investors votes aren't returned, their voices are lost and others are heard in their place.

Shareholders Shedding Voices - Communicate Your Concerns
Individual investors are increasingly losing their voices (via proxy or in person) in crucial shareholder voting matters. Check out this article.

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