Many companies are working hard on achieving better levels of shareholder engagement in the wake of the recession – and that gives shareholders even more opportunity to exercise their legal entitlements.
This trend for greater stakeholder engagement is already emerging in the stronger economic cycle since the recession, as firms with forward-thinking corporate governance, look for ways to ensure they are operating in a way that reflects the desires of their investors.
But crucially, this trend is not just a case of “if it ain’t broke, don’t fix it” – shareholders are not simply invited to express their displeasure at an AGM, as may have been the case in the past.
Instead, there is genuine ongoing engagement, allowing institutional investors and those with long-term holdings to have a real say in the medium-term direction of the company into which they have placed their funds.
As a shareholder, you have certain rights anyway, and you should have a shareholder agreement to set out exactly what you are entitled to – and how the views of other shareholders affect your ability to exercise your own wishes.
This is likely to depend to an extent on the size of your stake – the more you own, the more power you’re likely to have, potentially even to the point of being able to remove directors or to change the articles of association of the company.
Different classes of shares give you different powers – for instance, management shares will typically come with extra voting powers, and are often used to make sure certain stakeholders can still sway important business decisions.
But whatever class of shares you hold, and whatever the size of your stake, you should receive certain rights when you buy into a company, whether you exercise these rights through ongoing engagement at the director level, or simply by turning up to vote at the AGM.
If you feel like you are not getting everything you are entitled to, or you are interested in drawing up a shareholder agreement to protect your rights and those of your fellow investors, contact us for more information about our shareholder rights services.