Individual investors are gradually losing their voices (via proxy or in person) in crucial shareholder voting matters. The cause for this under-representation has practically nothing to do with anything as thrilling as deceptive company practices or secret votes. It's just that fewer individual shareholders are choosing to return their proxies.

This lack of return creates a lot of dilemmas for businesses that wish to proceed with the voting process.

After all, for voting to happen it truly is necessary to reach a quorum, that is the number of shareholder and/or proxy votes that happen to be required to conduct business (typically a majority of the shareholders). If a quorum cannot be reached on account of lack of votes, then many occasions the Ten-Day Rule can be utilized.

The Ten-Day Rule makes it possible for brokers to vote proxies for investors that have not turned in their votes 10 days prior to a meeting at which voting will take place. This rule can only be applied to routine matters, which delivers an ambiguity that's quickly becoming defined and amended.

Non-routine challenges from equity capital markets which include emerging capital from equity capital market plans has to be voted on by shareholders. Soon there may be Election Contest Rules enacted that would require shareholders, not brokers to vote in questionable director elections or when there's a recommendation for an Election Contest as well.

Significant problems for businesses are caused when individual proxies aren't returned and the Ten-Day Rule just isn't applicable. Individual investors and brokers both have a tendency to vote on behalf of the company administration, but institutional investors don't always have the management's best interest in mind.

They do however always return their proxies. This could give them over-representation within the voting processes and unfair control of the companies.

Why the indifference to voting amongst individual investors?

Many may find the terminology of the ballots filled with business jargon and hard to understand. Several might believe that other individuals would do the job for them. The factors for not sending in proxies are as distinctive as the individual shareholders themselves.

Tips on how to Improve Proxy Returns

What can be done to motivate individual investors to vote on their behalf? Well thought-out correspondence and educational campaigns developed to call shareholders to action can help.

This matter is certainly crucial to the future of businesses mainly because when an individual investors votes are not returned, their voices are lost and others are heard in their place.

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