As part of the digital evolution, client communications are increasing as more companies use electronic tools to issue materials to investors as well as to collect their votes. Despite the greater availability of information, Patricia Rosch, president of investor communication solutions at financial software company Broadridge International reports that only about 28% of retail shares were voted in the US during the latest proxy season, leaving more than 97bn retail shares that remained un-voted.
Voting levels vary from country to country. Different markets have different requirements and some are more stringent than others about voting. Interestingly, shareholder participation in voting is generally higher in Asian markets than in Europe.
Retail investor participation in voting is lower than that by institutional and corporate investors, In the US, for example, institutional and corporate investors own 68% of shares and vote on 91% of them. While retail investor participation is lower, this group typically votes in favour of management.
To identify voters and make sure the right person votes, Broadridge uses a client control number, unique to the mailing for the AGM and sent via paper or electronically. There is also a quick response (QR) code on the form that automatically loads. “The more we can help drive the one-click philosophy, the more beneficial it is for the issuer and for the investor,” says Rosch.
Electronic information flourishes
Electronic proxy information and voting is especially important for institutional investors. Corporate issuers are increasingly interested in the ability to provide anyplace and any-type voting.
The US first permitted electronic delivery in 1997 and today about 94% of votes are electronic, whether online or via mobile devices. US regulators also require that issuers offer the option of posting materials electronically, which has greatly reduced the amount of paper they send. Electronic delivery of materials represents 34% of the total, up 2% from 2014.
Canada has also introduced regulation to minimise the number of annual reports and only about 2% of shareholders still request a paper copy.
Japan used to have almost completely manual voting, Rosch says, which has far-reaching consequences as companies must give a greater period before the deadline for voting if the ballot is submitted in paper format. However, the Tokyo Stock Exchange has been promoting electronic investor communications, which has transformed the market.
Mobile voting has also been introduced in several countries, with investors in markets such as Singapore able to get proxy material delivered to their mobile devices. “The benefit for corporate issuers is they’re showing good governance by alternate voting channels,” notes Rosch.
She expects the future of technology to be in providing integrated digital delivery channels. E-delivery for proxy materials will enable investors to go to an independent website to sign up once and receive all their financial and consumer communications electronically. “As you move into the new digital evolution,” she adds, “you’ll have more choices on where you get the materials.”
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