When the fiscal year of most closed-end funds ends December 31, annual shareholder meetings follow – as does “proxy season” each spring. During this time, shareholders have the crucial opportunity to vote on proposals which may have potentially significant impacts on investments. Despite the importance of voting, it often gets overlooked, leaving shareholder interests in the hands of others. No matter the size of an investor’s holdings, each shareholder’s vote is vitally important for many reasons.
Why is it important for shareholders to vote?
Through voting, shareholders have the power to influence important decisions that have a significant impact on the company and their interests. Here are three key reasons why shareholders need to vote.
1. Influence Corporate Decisions: From electing board members to approving corporate actions or other important decisions, shareholders have the power to directly impact the direction of their investment. Voting helps ensure outcomes align with shareholder objectives.
2. Protect Investor Interests & Rights: When shareholders vote, they have the opportunity to safeguard their interests, uphold their rights, and express their approval of fund managers, which could affect the fund’s long-term performance and/or the consistency of the fund’s investment strategy. And, when more shareholders vote, the interests of the true majority of shareholders are maintained.
3. Enhance Efficiency & Minimize Cost: Shareholder proposals have minimum voting thresholds that need to be achieved in order to complete the business of the shareholder meeting. When more shareholders vote, these thresholds can be achieved without incurring additional costs while enabling business matters to proceed on a timely basis.
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