The Association of Investment Companies (AIC) has launched a campaign to ensure all investors can exercise their right to vote their shares.
The ‘My share, my vote’ campaign seeks to end poor practices among some investment platforms and providers, such as failing to pass on voting rights and information, charging customers to vote, and declining to vote shares even when requested to do so.
These practices have come to light following the activist Saba Capital’s proposals to force radical change at seven investment trusts. Herald Investment Trust’s shareholders heavily defeated Saba’s proposals last week, but the other six votes are still to come. While major platforms have acted quickly to keep their customers informed and to help them vote, other platforms and providers have not, and in some cases customers have found themselves unable to vote or have been charged to do so.
The AIC has written to Jonathan Reynolds MP, the Secretary of State for Business and Trade, to call for a change in company law so that nominees, including retail investor platforms, must offer information and voting rights to the beneficial holders of shares.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “It’s simply unacceptable that investors find themselves left in the dark about their right to vote, prevented from voting or charged for the privilege. If we are serious about shareholder democracy, investors must be able to have their say.
“The large platforms have improved shareholder engagement significantly in recent years, and they have acted quickly in response to the Saba proposals. But we have to move beyond just relying on firms to do the right thing. We cannot have a situation where investors and their advisers are actively prevented from exercising their voting rights because the law allows their platform or service provider to choose not to pass on those rights.
“We are calling on the government to change the Companies Act so that nominees, including platforms, cannot avoid passing on voting rights and information to their customers. Now that investing takes place in a largely digital world, changing the law is essential for the health of our markets and to get more people engaged with their investments.”
The AIC’s solution
The AIC believes that Part 9 of the Companies Act 2006 should be amended to:
- Make it mandatory for the nominee (for example, a platform) to pass on company information and voting rights unless the customer opts out.
- Ensure where a customer does opt out, the nominee has a periodic requirement to confirm if this remains the customer’s preference.
- Allow any opted-out customer to opt in, on demand.
You can read the AIC’s letter to the Business Secretary, Jonathan Reynolds MP, here.
