How small shareholders can actively shape corporate direction
Stephen Grootes explores the various ways shareholders can impact company decisions, regardless of their share size. All this and more on Investment School, brought to you by CFI, an Authorized FSP.
Having shares in a major corporation can be a daunting venture that requires patience, courage, and a keen eye for detail. Although seeing your investments flourish within a well-run company can be exciting, not all management teams or growth strategies will align with your goals.
So, what steps can the average shareholder take to feel valued and have a voice in the business decisions made by the company they have invested in?
Stephen Grootes hosts Vincent Anthonyrajah, CEO and co-founder of Differential Capital, and Karabo Makete, Partner and Investment Principal at Aions Ventures, to discuss the crucial role of governance in companies and how even the smallest investors can shape corporate direction through key mechanisms.
Listen to the full episode of Investment School. Brought to you by CFI, an Authorized FSP.
“Boards have to start paying attention because they have to look after all stakeholders,” explains Anthonyrajah. “This increased focus on that means that there is potential that someone who only has one share could have a voice.”
Although selling your shares in a mismanaged company is an option, Makete suggests that it may not be as effective if you want your voice to be heard, particularly if it’s a company you believe in. The Barloworld AGM held earlier this year serves as a good example of shareholders making a difference in corporate governance. The majority of shareholders rejected a buyout offer and voted against a remuneration policy for independent directors.
Ways to have an impact, as a small shareholder:
- Connect with other shareholders: Build rapport with fellow shareholders to discuss recent updates, whether they involve policy changes, strategic announcements, or management appointments. Cultivating a network of shareholders can be a valuable asset when voting on corporate decisions.
- Find the right setting to ask questions: Anthonyrajah advises that having your concerns heard by the higher-ups may depend on the setting. Scheduling a small meeting could prove to be more effective than waiting for the AGM to ask all of your questions.
- Milestone funding: A financing method where the investor releases funds in stages, contingent upon reaching clear milestones. If feasible, milestone funding serves as an excellent strategy to mitigate risk and retain control as an investor.
To stay updated on the ever-changing world of investing, tune in to Investment School, brought to you by CFI, every Thursday on The Money Show with Stephen Grootes (6pm-8pm).
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