Last 16th April, the association of small shareholders of Banca MPS issued a press release entitled “Is Monte dei Paschi hindering Small Shareholders” attendance at the meeting?“. In short, the Azione Banca MPS association complained about the company's lack of information regarding the modalities of attending the meeting and, in particular, that ”all the Group's branches are receiving thousands of requests to attend the meeting, to which no clear and consistent answers are being provided". In short, despite the Bank having made a free designated representative available, individual (or retail) shareholders were still encountering significant obstacles in exercising their right to vote.
Upon analysing the eight general meeting minutes that have already been published, it can indeed be observed how the establishment of the designated representative has failed in its noble intention, which was meant to mark a turning point in retail shareholders' participation in general meetings. Over 9,000 shareholders voted at the 8 general meetings analysed (obviously many at multiple meetings, so the number includes several duplicates), of which 534 were individual shareholders. Well, only 14 private shareholders out of 534 made use of the designated representative appointed by the companies: on average, fewer than two shareholders per general meeting took advantage of the free delegate.
How can such a failure be explained?
Certainly, one answer comes precisely from the BMPS share action: not only were small shareholders evidently unaware of the opportunity offered, but even the bank tellers themselves were unable to provide an adequate or consistent response.
The initial data from the 2012 assemblies also seem to confirm that the same situation is found in many sectors.
The real problem, probably, is that none of the real obstacles to private shareholders voting have actually been eliminated:
- InformationVery often (perhaps almost always), the private shareholder is not adequately informed of the existence of the designated representative, the methods of exercising the voting right, and probably not even of the convening of the meeting itself and the detailed agenda;
- CostBanks often charge a fee for producing certificates, which can range from 5 to 10 euros or even considerably higher amounts, with a relative weight that is obviously significant on the investments of private shareholders.
Here, then, is an easy explanation of why the sole instrument of the designated representative proved decidedly insufficient for the purpose.
A possible and easily achievable solution could instead be represented by small shareholder associations, thanks to legislative changes that genuinely support these individuals. Through association, in fact, all information could originate from the association itself and be disseminated to shareholders, thus avoiding the need for them to act individually online or through banks (which are often, quite rightly, unaware of events). Through associations, which would nonetheless need to be free of any conflicts of interest, it would then be possible to offer all the necessary professional support to exercise one's voting rights, at a significantly reduced individual cost.
On the other hand, the institutional investor, who does this for a living, also often needs third parties to monitor information sources and notify them of an upcoming meeting. The role of a proxy advisor, after all, is also this: to support the investor throughout the entire voting process, from the publication of the notice of communication to the vote at the meeting.