Most investors are unaware of their shareholder rights

Much has been made of the emergence of a new generation of investors during the pandemic, but just how engaged are they?  

While everyday investors may be piling into exciting new tech stocks and building their pot of savings, the majority don’t know they can enact real change in the companies they’re invested in. 

A growing number of start-ups are now creating solutions to help savers have a say in how fund managers are voting on the big issues.

Shareholder say: The majority of retail investors are unaware what a shareholder right is and most aren’t using it  

Tulipshare is one such platform. Backed by Monzo co-founder Tom Blomfield, it lets activists buy shares in companies to try to get them to act or change their behaviour.

The idea is to give ordinary investors a similar impact to that enjoyed by big activist investors. It currently allows this for companies on the New York Stock Exchange and Nasdaq.

Tulipshare says: ‘Most retail investors take a passive approach to investing by investing in ETFs or working directly with an advisor. As a result, they often lose out on their chance to align their investment strategy with their views.’

And the platform’s recent polling of 1,001 consumers aged over 16 found there is a huge lack of awareness when it comes to shareholder rights. Over half – 60 per cent – are unaware that they are allowed to vote on how a company is run.

While institutional investors’ votes at AGMs are increasing year-on-year, individual investors’ votes only represented 28 per cent of their total shares during the 2020 proxy season.

Tulipshare’s research reveals less than a quarter of respondents always exercise their shareholder right to vote at the AGM of companies they invest in, both directly and through a pension or Isa.

Founder and chief executive Antoine Argouges told This Is Money: ‘There is a systemic problem within the broker and wealth management industry. The thinking is that investors are here only for the gains and and that they only care about the performance and not at all either the company or the actual corporate governance that they can drive in the business or investing in.

‘You can really have a say in the way your business is run and put your agenda on the company’s roadmap by owning a share and a piece of this company.’

Younger investors are exercising their rights more than their older counterparts: 34 per cent of people aged 16 to 24 are voting at the AGMs of companies they invest in while just 15 per cent of people over 55 are voting.

Argouges. said: ‘It’s funny because the stats came out as the opposite of the actual political vote where the numbers tend to be on the other side where the older crowds are maybe a bit more inclined to actually use their citizens vote. 

‘Whereas in corporate governance I think the younger crowds are maybe a bit more conscious about who is actually having an impact on our lives.

‘In the UK people tend to realise that it’s by changing those corporations that you change the system we live in. So I think there is a lot about how this generation, despite whatever we can read online, is probably one of the most educated generations ever, and that is something that we want to capitalise on.

‘They’re understanding who is actually driving the impact. They might not necessarily have the right solutions or the way to actually affect the change, but we can be their technology platform that would support this for them.’

Tulipshare has launched a number of high-profile campaigns targeting high-profile companies for ESG issues.

Its most recent campaign targeted Salesforce. Shareholders will submit a proposal via Tulipshare to request the software company commissions an independent audit of its impact on civil rights, equity, diversity and inclusion.

Tulipshare is the lead sponsor to submit the proposal which will be heard at Salesforce’s next AGM which is widely expected to be in June.

This post first appeared on Dailymail.co.uk