Half of UK shareholders are blocked from attending AGMs

Nearly half of UK shareholders are blocked from attending annual general meetings of companies they invest in, according to new research.

In recent years, attention has focused on democratisating investment as the pandemic ushered in a new generation of DIY investors, but little has been done to give retail shareholders a voice.

The vast majority of UK shareholders would like to attend an AGM but 48 per cent are excluded because of a complex share ownership system, according to a survey by Lumi, a company which facilitates shareholder meetings.

Kerry Leighton-Bailey, director of shareholder engagement at Lumi said: ‘The process to attend and vote at an AGM as a retail shareholder is like breaking into Fort Knox. Even our CEO, who understands the system, has tried to attend meetings as a proxy but faced roadblock after roadblock.’ 

This comes even amid attempts to open up the process with ‘hybrid’ events to encourage broader participation.

When everyday investors buy shares in companies through a broker, like Hargreaves Lansdown or Interactive Investor, the individual shareholder’s name isn’t directly registered with the company they’re investing in.

Instead the platform gives investors the ability to cast a vote by proxy ahead of the meeting.

‘The issue with that of course is you’re voting on resolutions for a meeting that hasn’t happened yet,’ Leighton-Bailey told This Is Money. ‘The point of the AGM is obviously to debate those resolutions and then cast your vote. 

‘The issue with that is you’re voting on resolutions for a meeting that hasn’t happened yet. 

‘The point of the AGM is to debate those resolutions and you can cast your vote depending on that.’

Just a fifth of shareholders surveyed by Lumi were aware they weren’t registered directly as a shareholder, and the vast majority – 85 per cent – say they would value more information in advance of AGMs to gain a greater understanding in advance of the issues being discussed.

‘It’s not communicated to you at all – the fact you’re not a shareholder. You won’t be on the register and you can’t exercise your rights in the way you probably think you can.

‘So people choose to invest in something they feel passionately about … [and] I don’t think they realise at that point that this is going to be difficult.’

The most common reasons shareholders gave for wanting to attend an AGM are to ask questions of the board about how the company is run (43 per cent), followed by making their voice heard on issues they are passionate about (42 per cent).

Just 29 per cent are interested in influencing dividends.

It seems that as the demographic shifts, shareholders now have motivations beyond wanting to grow their wealth and save for retirement.

For Gen Z and millennial shareholders, ESG issues and making their voice heard was the top issue, whereas it fell down the priority list in other age groups.

Leighton-Bailey says: ‘We’ve talked quite a lot about the changing nature of shareholders and retail shareholders in particular. 

‘I think maybe 10 years ago nobody cared because people were really only buying shares for investment purposes to see a return. 

‘They weren’t buying them for the reasons that many more people are buying today… which is because they want to make a difference or have their say.

‘I think issuers are more cognisant of the fact it’s not just a business meeting now. People do care.’

In addition to the complex ownership system, shareholders are being locked out by logistical considerations.

Ellie McLaughlin, campaigns officer at ShareAction says: ‘It’s been positive to see some improvements to accessibility as a result of the pandemic, particularly with the rise of a ‘hybrid’ format that many companies have continued to use through 2022 AGM season. 

‘However, it’s been concerning to see a significant proportion revert back to in-person or online-only meetings.

‘We attend around 100 AGMs each year, and in our experience, hybrid meetings provide both the “best of both worlds” for accessibility and meaningful company engagement.