Did shareholder bases become more international as a result of virtual meetings?
Virtual meetings made it easier, at least in theory, to set up meetings with international investors. But how much did shareholder bases change in reality? And if they meaningfully changed, what does that mean for investor engagement during the next year, when there is an expectation that we will return to some regular cadence of in-person meetings, but could still face restrictions on international travel?
Without providing a binary answer that prevents you from reading on, the short answer to the question posed is ‘not really’. From any perspective, we believe virtual meetings have had very little impact on international ownership.
International shareholders have always been there and have grown steadily in line with the ability to buy and sell shares across the globe. But it’s clear that the ecosystem, issuer behavior and embedded market practice before Covid did not actively meet all shareholder needs. The consequence of this gap was a lowering of governance worldwide because shareholders who could not travel to company meetings either for personal or logistical/cost reasons may not have been able to exercise all their rights as owners of the company.
If we take this article’s point to the extreme: do virtual meetings mean those who cannot travel easily domestically (for whatever personal reason) to AGMs now hold more shares than in the past? Again, the answer is 'no'.
Virtual meetings have, of course, enabled improved governance overall as they allow more opportunity for those who cannot attend physical meetings to still be present. At Proxymity, we fully support all future AGMs having a virtual element, even if they are also held in person. This would be a positive outcome for both issuers and investors.
Importantly, the move to digital has not only enhanced the actual meeting via virtual attendance but also the meeting processing. New technology and ways of working – such as Proxymity’s digital investor communication platform – have provided a significant improvement in the quality of governance for both issuer and investor by offering real-time announcements direct from issuers, immediate voting and better disclosure, resulting in improved transparency, accuracy, simplicity and speed.
Drivers to change the industry ecosystem International ownership has occurred due to many factors beyond Covid and the acceptance of virtual meetings. This is not to dismiss the importance of virtual meetings but, once Covid started to bite, issuers realized very quickly that the infrastructure to engage with shareholders wasn’t quite there.
Two years on, it’s now clear that the market ecosystem structures for ‘virtual’ governance had not kept up with how shares were held by people or institutions around the world. We know from our clients this caused issues where shareholders, both domestic and international, could not easily cast a vote or attend meetings.
Many company secretaries and lawyers were left to scour local law to see whether virtual AGMs were technically legal. Shareholders were faced with a dilemma of travelling in a pandemic to make their voice heard, and those who couldn’t, wouldn’t or were faced with meetings behind closed doors, were disadvantaged. Even more concerning is that companies might not capture a true reflection of their shareholders’ views and wishes.
Sometimes it takes a compelling world event like Covid to underline the required change in a market, change that Proxymity has been leading to improve the investor and shareholder ecosystem for issuers, investors and the intermediaries that service the chain of custody.
Using native digital technologies to enable accessibility, visibility and speedier decision-making, how and where a shareholder holds shares is now, in 2022, significantly less important. Improved governance where issuers and their investors are truly connected is now possible, as it should be in a connected world.
Examples of this change include Proxymity providing real-time announcements direct from issuers, increased voting time for investors and higher voting pre-meeting, as well as greater engagement at meetings as proven by UK-based international retailer M&S, where attendance has increased massively for AGMs with virtual attendance.
Whether domestic or international, the advent of virtual AGMs alongside digital proxy voting and shareholder disclosure means remote shareholders are no longer inactive ones.
Supportive legislation driving transparency One of the key trends we have seen at Proxymity, especially in Europe, is the importance of and desire for transparency between issuers and investors. Fueled by the revelations in the Panama Papers and other information from Wikileaks, as well as public opinion forming on investors that do not share support for a company’s ESG initiatives, this trend has manifested in the form of new legislation around the world.
In Europe, the deployment of the Shareholder Rights Directive II (SRD II) is part of this solution, and corporate compliance with it is only one of many reasons why issuers and shareholders, along with the rest of the ecosystem, should connect digitally on a single platform. For example, if more issuers with dual country listings adopted a digital approach, they would be helping to remove barriers and increase voting participation.
A secondary benefit of SRD II – and one we know is of more importance to the companies we serve – is beneficial owner voting. This is a benefit enhanced by the Proxymity platform, which provides real-time visibility of the investor and the votes being cast. Issuers can be confident which shareholders are attending and voting, and engage with them pre-meeting if necessary: it's a game changer for an industry used to operating a fragmented, largely analogue environment.
Combining technology, processes and legislation The drive for better governance to attract international shareholders is not only down to technology and new processes, however; these have to be in place, but good legislative frameworks are needed, too.
Covid provided a catalyst to move voting and meetings from an industrial society to a digital one. There is still a lot to do as some markets have historic ecosystems or legislation that block good governance. But better governance does, and will, attract investment from investors globally. To meet this objective, issuers and investors must work together, along with their custodians, not just domestically, but also worldwide to demand technology fit for the digital society.
Proxymity is ready, alongside the providers of virtual meetings, to support the whole ecosystem with efficient disclosure, digital proxy voting and shareholder transparency for all.
Proxymity connects the world’s ecosystem of issuers, intermediaries and investors digitally in real time, bringing unprecedented transparency, efficiency and accuracy to traditional paper-based processes. Our global solutions give public firms confidence that their AGM/EGM agendas are transmitted as ‘golden source’. As the leading investor communications platform, we provide scalability, efficiency and full compliance, and promote enhanced corporate governance by improving communications between issuers and investors and making it easier for intermediaries when servicing their clients.
We are backed by the industry's leading financial institutions: BNY Mellon, Citi, Computershare, Deutsche Bank, Deutsche Börse HSBC, JPMorgan and State Street. For more, please visit https://proxymity.io/.
