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Making Sense Of The Proxy Voting Chain

Monday, 18 February 2019

The proxy voting chain is the complex flow of parties and processes involved in the execution of voting instructions. In the UK, this ecosystem is complex, opaque and even anachronistic. It comprises multiple intermediaries between company and investor, adding layers of complexity and presenting the potential for many mistakes. 

This article is part of the Preparing for your AGM series

Shareholders, especially institutions, are today more compelled to exercise proxy voting rights than ever before, which means that issuers are under commensurate pressure to proactively manage the chain through which the votes are processed. 

The UK Stewardship Code (the “Code”) is a voluntary code and, whilst not every institution takes up every aspect of it, investors increasingly recognise the need to engage with the management and directors of portfolio companies and do therefore exercise votes with a view to enhancing long-term investment values. Institutional investors have a fiduciary duty to make full use of their voting analysis and voting power. Put all this together with the rise of shareholder activism and there is an ever-increasing call for transparency and security of vote execution. 


Boudicca has prepared this article to highlight the predominant, intrinsic characteristics and pitfalls of the chain, but also to emphasise that there are opportunities to intervene should issues arise. Every year, companies and investors face the same reoccurring problems.


Institutions will often wait until the last two weeks running up to a shareholder meeting to lodge their voting instructions, which is in line with the timing of the release of Proxy Advisers’ reports. This ‘delay’ means we can expect an increase in vote submission during that period.

Votes input by institutions are buffered by vote service providers until 24/48 hours prior to the registrar’s own vote cut-off. This last-minute visibility gives companies little or no time to react to voting decisions made by shareholders.

There is the possibility to ensure earlier tabulation if an investor can be persuaded to engage with their Client Service Representative and have the votes manually advanced through the systems.



Owing to the many layers, the decision-time available to institutional investors is reduced by several days.

If an investor has missed certain nuances of governance reporting or disclosure, they may vote unwittingly ‘blind’, either in accordance with Proxy Adviser recommendation or their in-house policy (e.g. ‘customised voting templates’). Should shareholder engagement lead to a change in voting decision by an Institution, it will likely be close to the voting deadline.



The proxy voting cut-off is generally 48 business hours prior to the meeting date. Missing a cut-off needs to be pre-empted and picked up sooner by undertaking regular vote reconciliation and engagement with investors to ensure that promised votes materialise. If a deadline has seemingly been missed, there may yet be a chance for physical representation via the issuance of a Letter of Representation.



The three main Proxy Advisers, ISS, Glass Lewis, and IVIS, are generally open to engagement about general policy proposals and shareholder expectations outside voting season (ideally November-January). PIRC seldom engages in detail, but is responsive to corrections.

Glass Lewis has a ‘moratorium’ on engagement with companies from the time the Annual Report and Notice of AGM goes out, through to the AGM. They often publish their voting reports as early as 1-2 days after Notice of Meeting is issued and charge for these reports. Contact prior to release of materials. ISS, IVIS and PIRC publish between 21 and 10 days prior to the meeting depending on their workload. Contact on release of materials.

The prevailing point is that, although fraught with such dangers, in most instances proxy voting errors / issues can be turned around, provided that the chain is constantly actively monitored by a dedicated resource, such as a proxy solicitation consultant.


The first stage of the voting chain involves notifying the market and circulating event materials to all parties with an interest in the company.

Meeting Announcement: A company announces the meeting and publishes Notice of Meeting up to 60 days prior to the event. Meeting materials are mailed and distributed by the company or Registrar to directly registered shareholders. These include directly registered retail shareholders, nominee accounts within Custodian Banks and Private Client Brokers (‘PCB’) – identifiable on the Register of Members. These PCBs are not decision-makers and will not vote unless instructed. Typically, the layer of custody provides Broadridge with meeting materials in order to service these underlying clients via ProxyEdge. If PCBs form a significant part of the Register, turnout can be low, because they tend not to vote and because they may not inform underlying clients of the AGM.



Once meeting materials are received, investment and corporate governance teams begin reviewing the meeting materials to come to a voting decision. Many of the largest investors will support their work with proxy adviser vote recommendation reports in the two weeks before the AGM.



Most vote instructions from investors, and Proxy Advisers are sent via ProxyEdge. Once collated, Broadridge submit vote instructions automatically into CREST or manually via proxy cards around 24-48 hours prior to the proxy voting deadline. Electronic votes or amendments can be submitted right up to the deadline. Smaller Custodians/Brokers not using Broadridge will leave it to the last minute to instruct.



This article was written by Boudicca Proxy Limited (“Boudicca”). A leader in the growing arena of investor communications, and based in London, Boudicca works to secure maximised proxy voting and participation in shareholder meetings and corporate transactions. Boudicca has worked on 300 AGMs, EGMs and M&A transactions for clients in the UK, Europe, North America and crossborder since inception ‐ including some of the most complex proxy voting cases and corporate transactions ‐ and delivers a high rate of success.