ii sends open letter to UK plc

It's time to shine a spotlight on shareholder communications and help spark engagement.

At a time when the government is looking to boost ownership of UK shares, it is the right time for UK plc to look at how it speaks to private shareholders. 

interactive investor, the UK’s second-largest investment platform for private investors, has written a ‘Dear CEO’ style letter to FTSE 100 chairs and the UK’s 20 most-held investment trusts on ii by value. 

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The platform is to launch a good practice ‘AGM Experience’ scorecard that will measure how well UK plc engages with private investors in the lead up to, during, and immediately after AGMs. It will focus on FTSE 100 companies and the 20 most-held investment trusts on its platform by value.

The importance of retail shareholder engagement and participation is an issue gaining momentum, and ii recently became the first UK investment platform to introduce voting on its app.

But ii believes even more retail investors would engage with their shareholdings if their shareholder communications were written in ‘plain English’. The platform has today written an open letter to UK plc to forewarn that it will be shining a light on their shareholder communications, and will be calling for improvements.  

The methodology has been created by interactive investor in partnership with leading financial services consultancy, the lang cat, who will be conducting the research on ii’s behalf. It has been peer reviewed for relevance and fairness by ShareSoc and UK Shareholders Association. 

The scorecard will be published regularly. As well as looking at companies that could do better, it will also aim to celebrate good practice, highlight which companies are going above and beyond in a particular aspect of engagement, and encourage all firms to continue to do better.

Richard Wilson, CEO, interactive investor, says: “With the clock ticking on Consumer Duty, it’s curious that the shareholder notifications we pass on to our customers are a world away from the standards investment platforms are held to. 

“It matters, because badly written shareholder notifications are a barrier to engagement, lead to poor decisions and create stress.

“Resolutions like the environment, pay, pre-emption rights, or investment trust continuation votes can really matter, and they can also have an impact on our customers’ wealth. 

“While companies are regulated in the way they speak to shareholders, let’s do more to engage in a retail friendly way. 

“As well as looking at companies that could do better, we will also aim to celebrate good practice, highlight which companies are going above and beyond in a particular aspect of engagement, and encourage all firms to continue to do better.”

Steve Nelson, director of the lang cat, says: “There’s a lot of momentum and a lot of goodwill around shareholder democracy at the moment and we need to seize that opportunity. We’re excited to be launching this benchmarking scorecard to celebrate good practice and encourage all firms to continue to focus on the important topic of shareholder democracy and to invest in improvements.”  

“It’s clear from AGM attendances and voting data that we face a huge challenge in getting shareholders to fully understand and exercise the very tangible rights that come with having a shareholding. Direct-to-consumer platforms have been doing their bit and have been making great strides in helping facilitate these rights for their customers, but that can only go so far. 

“We believe it’s time to shine some light on which companies are making it as easy as possible for their shareholders to engage. Who is communicating best? Who is going above and beyond? Who is making their company as accessible as possible? These are some of the questions we’ll be asking as we go through this assessment process. For whatever reason, it’s clear that the majority of customers do not fully understand or engage with the very real collective power that they have as shareholders. It’s time to do our bit to help put this right.”

AGM Experience – the good practice scorecard - Terms of reference 

Scoring: Companies will be assessed across four distinct sub-categories as part of the assessment process:

• Transparency
• Communication
• User experience
• Going above & Beyond

Are the AGM date and meeting place (or virtual details) clearly stated on the company’s website?

Things to consider:

- Is there an area on the company website dedicated to informing shareholders of the details – is this clear and easy to find?

Are the instructions on how to attend/participate clear?

Things to consider:

- Clear details on how to access to the meeting (e.g., logging on to any electronic platform to attend and participate remotely)

- Clear how to appoint and instruct a proxy – including proxy deadlines

Are the pre-AGM notifications clearly laid out and easy to find?

Things to consider:

- Are the shareholder notifications written in plain English? 

- If not, is a glossary provided?

- Is there an AGM video and/or social content summing up some of the main notifications?

- How is the quality of the chairman's letter at the start of every AGM notice? (Plain English perspective/flagging key points)

How is the company engaging with end-investors in terms of notifying them about upcoming votes?

Things to consider:

- Do stakeholders have an option to register for updates?

- Are timely updates provided?

- Emails

- Post

- Does the shareholder have the option to choose the best form of communication – can they change this if needed?

Are pre-emption rights and other notifications being appropriately explained on plain English to the shareholders prior to the meeting?

How are shareholders given remote/virtual access?

Things to consider:

• what platforms, apps are needed
• do companies highlight what technical support is available and how to access?
• Accessibility - hearing/visual impaired

Are shareholders being given the opportunity to submit questions in advance of the meeting?

Things to consider?

• Both for virtual and in person?
• Is the information clear beforehand on whether shareholders in virtual attendance can only see/hear or have the opportunity to ask questions?
• If questions need to be provided in advance/shareholders have prior questions – are these details provided, with a clear timeframe? And how their questions will be answered.

In person AGM/EGM Accessibility

Things to consider:

- Is the meeting and content accessible to all? (Flexibility, inclusivity, diversity)

- Different methods of accessing flagged?

- How accessible is the AGM in terms of accessibility in terms of location to major cities in the UK, but also in terms of time? E.g., a 9am meeting may not be easy to get to for people traveling from afar.

Is the meeting recorded? If so, is the meeting made available to shareholders?

Are past votes data/information easily available on company website?