Shareholders locked out of annual general meeting (AGM) season
Many investors are being effectively disenfranchised by investment platforms with a tediously complex voting process, Which? has found.
A firm’s annual general meeting (AGM) is an opportunity for investors with shares to hold an organisation to account - whether you care about the environment, workers rights, or just want the firm you own to be better run.
Despite a flood of stock market newcomers during the pandemic (7.1m according to the FCA), shareholder advocacy group ShareSoc estimates just 1% of private shareholders exercise their right to vote.
Investment platforms may be partially to blame, with our research finding that while some have a streamlined voting system, for others it’s complex and convoluted with investors given no automatic voting rights and no ability to vote online.
Read on to find out why you should vote in an AGM and which platforms made voting simplest.
What is an AGM and why does it matter?
The annual general meeting is a key opportunity for shareholders - the ultimate owners of a company - to question a firm’s decisions over the past financial year, as well as vote on important proposals such as executive pay and the election of board members.
'The right to vote is a major benefit of investing,' according to Annabel Brodie-Smith, communications director at the Association of Investment Companies. 'Shareholders get a say in how their company is run and have the chance to attend AGMs where they can ask questions and express their views.'
The power of shareholders is not to be underestimated; oil behemoths such as BP, Shell and ExxonMobil have come under huge pressure in recent years from ethically minded activist investors pushing climate-related resolutions.
In 2021, Exxon was forced by investors to install new board members with a green agenda, while Shell came under pressure to split off its oil and refining operations and focus on renewables.
Several big UK firms have important AGMs coming up, including Associated British Food (Aug 31), Imperial Brands (Sep 30) and Sage Group (Sep 30).
- Find out more: ethical investing explained
Investment platforms and roadblocks
Investment platforms provide an easy and cheap way to hold and trade shares (though some are much cheaper than others).
However, you must rely on the investment platform to vote on your behalf. This is because in most cases you're not technically the owner of the shares - you're the beneficiary.
We found platforms including HSBC and Bestinvest do not pass along voting rights by default and do not offer online voting despite being almost entirely online-based. Customers must instead advise them of how they want to vote several days in advance.
Similarly, Barclays Smart Investor customers must call a telephone helpline in advance to register proxy votes, although they do offer some online voting for select companies and assets.
In contrast, Interactive Investor and Fidelity both allow shareholders to vote online and also send out shareholder information.
We asked leading investment platforms what they offer their customers:
| AJ Bell Youinvest | Yes | To vote in an AGM, customers need to send a secure message confirming how they’d like to vote and AJ Bell will send their instruction on. For EGMs and other corporate actions, customers can log into their account and vote from the Corporate Actions page online. | Minimum 5 working days. |
| Freetrade | Yes | No automated in-app voting service is available. Instead, Freetrade will provide a letter of representation that confirms investor holdings to enable them to register and attend. Customers can request this service via the app. | Usually 2-3 days but can vary. |
| Hargreaves Lansdown | Yes | Clients must either email the helpdesk, send a secure message through their account or call HL to give their voting instruction. | Minimum 5 working days. |
| Interactive Investor | Yes | Customers are sent shareholder information and are notified when they are eligible to place a vote via ii’s ‘voting mailbox’ service online. They can then log into their account and vote according to their preference. | Usually 2-3 days but can vary. |
| Close Brothers Asset Management | Did not respond | Did not respond | Did not respond |
| Barclays Smart Investor | Yes | Customers must call a telephone helpline in advance to register proxy votes, although they do offer some online voting for select high value companies and assets. | 5 working days for a proxy vote or 7 if you wish to attend the AGM in person. |
| Bestinvest | Yes | It can’t be done online but it can be done via email and Bestinvest will either enable shareholders to attend or do it via proxy. | Minimum 6 working days. |
'Voting needs to be quick and easy,' says ShareSoc director Cliff Weight. 'A slick one or two click process is needed. Interactive Investor has a good service, but some platforms don’t even try.'
'Retail investors deserve to be heard but they have effectively been disenfranchised,' argues Weight. 'Companies which make voting and attending AGMs hard should probably be avoided – it is a big red flag.'
A spokesperson for Bestinvest told Which? that historically the platform has been funds-focused (where fund managers decide how to vote) – but '[voting] functionality is something we will look at in due course, as we appreciate its benefits'.
5 tips for voting in AGMs
If you own shares in any companies or investment trusts, an AGM is a great chance to have your say. Get the most out of them with a little preparation:
- If you require a proxy vote make sure you do so well in advance.
- Where board members are up for election make sure to check their backgrounds and stated objectives.
- If you own fractional shares in a company you will generally not be able to vote in AGMs.
- Although it might seem a no-brainer to vote for a dividend, stop and consider whether the firm can afford it or if it would be better off reinvesting the money back into the company.
- Make sure to have a look through the firm’s annual reports and accounts beforehand so you have a clear idea of how the company is performing.
Interested in investing but not sure which platform is right for you? Head over to our best and worst investment platforms page where we review all the major platforms for you. You can also ensure you’re not overpaying in platform fees by checking out our investment platform fees and charges page.
