UK retail stockbroker Hargreaves Lansdown has launched a new online service allowing clients to vote at shareholder meetings in the latest move aimed at giving ordinary investors more of a say.
The broker’s customers, who number 1.75 mn and hold around £120 bn ($149 bn) in assets, will be able to cast their votes at UK and European companies, as well as register to attend AGMs and emergency shareholder meetings.
The change comes as brokers, investors and other financial market players look for ways to enable more retail participation in corporate decision-making.
In the UK, the right to vote is held by a broker’s nominee account, rather than the underlying investor, and traditionally vote information has not been passed on.
Last year, a government-commissioned review led by lawyer Mark Austin recommended change to the current system of intermediated shareholdings.
‘Efficiencies and economies of scale’ have ‘arguably been prioritized over corporate governance and transparency, particularly in relation to retail investors,’ notes the report.
Hargreaves Lansdown has partnered with financial technology firm Broadridge to deliver the new digital voting service, which will cover 5,800 UK and European equities. Previously, the firm's clients had to manually identify shareholder meetings and phone up if they wanted to cast a vote.
Customers will not be able to vote on US shares, however, as the structure used to invest in the region does not hold voting rights, says the broker.
‘Retail investors are taking a keener interest in having the power to influence corporations on important issues such as board diversity, climate change and sustainability,’ says Tom Lee, head of trading proposition at Hargreaves Lansdown, in a statement.
‘Providing a new digital capability for this self-service system gives retail investors a greater say in the governance of the companies in which they hold shares and the democratization of markets.’
Push for shareholder democracy
Over recent years, several firms have taken steps to improve shareholder democracy and open up voting to retail investors.
In November 2021, Interactive Investor, another UK retail broker, switched to an opt-out system for notifications about AGMs and voting opportunities. The platform recorded 210,000 shareholder votes in 2022, a rise of 30 percent year on year, according to an article in the Financial Times.
Last year, asset manager BlackRock said it would let UK retail investors vote on shares in certain mutual funds during the 2023 proxy season through a partnership with investor communications platform Proxymity.
Others looking at the issue include start-ups such as Tumelo, which aims to give retail investors a say in the investments held by their pension fund.
The focus on retail investors received a major boost when millions of new brokerage accounts were opened during Covid-19 lockdowns.
During this time, wild trading in meme-stocks like GameStop and AMC Entertainment highlighted the power of retail owners when they co-ordinate via social media platforms.