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What are the Best Tips for Shareholder Voting?

Article Details
  • Written By: Felicia Dye
  • Edited By: Melissa Wiley
  • Last Modified Date: 11 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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It is important for shareholders to avoid neglecting their voting rights. When voting, careful thought should be given to each issue, and personal principles and ethics should be made part of the decision-making process. Shareholders should not blindly accept the recommendations that are provided by companies. They should also be very careful about entering into voting agreements since these can be legally binding.

Individuals should be well aware of what their shareholder voting rights are. This can often be determined by reviewing a company’s charter or its by-laws. Thereafter, it is important to realize that one of the most important tips regarding shareholder voting is to vote.

Many investors make the grave mistake of leaving the decisions to other people. Shareholders have voting rights because it is understood that individuals who invest their money have something at stake. Successful investors realize the importance of protecting their interests.

Shareholder voting is not something that should be done haphazardly because it is recommended on a list of tips. It is important to realize that that votes may not only affect personal investments, but they may also impact the lives of many other individuals. For example, a vote on labor standards could result in thousands of people retaining or losing their jobs. Decisions should, therefore, be made thoughtfully and be based on individual principles and standards of ethics instead of pure profit motives.

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One of the matters that shareholders should be especially cognizant of is the selection of directors. Since these individuals have the ability to determine the fate of the businesses that serve, they should likewise be recognized as able to determine the financial fate of the shareholders they serve. To make wise choices, individuals need to investigate the options. Decisions should not be solely based on the information posted on the company’s website or provided by the individual who stands to gain or lose a position.

Recommendations should not be accepted blindly. When companies send out proxy materials, they often include the companies’ suggestions of how shareholders should vote. Individuals have a responsibility to scrutinize those suggestions and to consider the motives behind them.

Be aware that shareholder voting agreements may be legally enforceable depending on the jurisdiction that the participants live in. These agreements, which generally involve multiple shareholders setting standards for their votes, can be powerful and influential tools. If, however, individuals are not careful, they may find themselves to be parties to strict agreements that are driven by interests or motives that are contrary to their personal standards.

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