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Investors in search of a voice

20th October 2014 Print

Investors want to voice their opinions on unethical company activity, but are being left in the dark, unaware of how to raise their concerns, according to research from The Share Centre. The research examines shareholder attitudes towards investing and aims to uncover what needs to be done to let shareowners know about their rights.

The survey of 1,500 experienced investors, who have over £10,000 invested in their portfolios, found that seven in 10 (70%) would voice concerns about unethical activity such as tax evasion, intensive farming and animal testing but simply don’t know how to raise them with the company concerned. The research found that a staggering 79% either need more information on how to raise objections or simply don’t know their rights as a shareowner. 

Only a fifth of investors (21%) admit that they know their shareholder rights, with a mere  3% having evoked their rights in the past. It is also apparent that some investors believe that their voice is too small to be heard by the big corporates with 9% stating that if they were made aware of unthical practices within the company they invest, they would simply sell their stock.

The research also shows that shareholder communications have a significant impact on whether people are inclined to exercise their shareholder rights. Of those who regularly receive shareholder communications, 73% state they would chose to voice an opinion with the company if they were aware of unethical activity, of those who do not, only 66% felt compelled to act.

In addition, well over a tenth (14%) of investors said that none of the unethical activity highlighted would encourage them to raise a concern or sell and that they would stay invested in the stock. 

Gavin Oldham, Executive Chairman at The Share Centre said: “Owning shares is not just about being another number in the room, investing at the right price and releasing a profit. It’s also about owning part of the business. There are many personal shareowners that want to play a more active role in their company’s governance, in order to match their values, but don’t know how to do so. There are also a large number who simply don’t understand what their rights are. Bridging this knowledge gap is crucial to giving personal shareowners a stronger voice in corporate governance, and share service providers should be at the forefront of this.”

In a roundtable held by The Share Centre in July 2014, featuring representatives from organisations such as the FCA, BIS, Share Action, ShareSoc, UKSA, ICSA and the Wealth Management Association, a key concern that emerged too little information on how to receive shareholder communications, attend AGMs and take part in shareowner circularisations and resolutions. It was agreed that this needs to be addressed as the first step to improving participation, and ensuring more personal shareholders exercise their voting rights.