Local retail investors have been urged to consider the importance of shareholder activism as a way of keeping companies and executives on their toes in terms of management responsibility.
Traditionally, large institutional investors and fund managers dominate the share registers of listed and unlisted entities locally, with retail investors carried along on the decisions the former make. Retail investors tend to adopt dormant positions in the register and instead of informing themselves about issues of concern, rely on proxies to make their decisions.
In developed countries, however, shareholder activism has seen all classes of investors inform themselves and coordinate campaigns against mismanagement, environmental recklessness or poor financial performance, forcing corporate leaders to account.
The issue of shareholder activism recently came to the fore in local investor circles, when retail giant, Choppies ran into a corporate crisis that forced all investors to make their own informed decisions on the way forward.
Speaking on the sidelines of a conference on responsible investment, Kgori Capital portfolio manager, Tshegofatso Tlhong urged minority shareholders to start exercising their rights and hold companies and boards accountable. “Every shareholder should start attending annual general meetings (AGMs) and stop giving proxy shareholders the power to be their voice and make decisions on their behalf,” she said. “You own these companies. It might be a small ownership but you own the company nonetheless and you can demand answers and make suggestions.”
According to Tlhong, AGMs give shareholders an opportunity to voice their opinions and utter their grievances when necessary. “Everyone has a right to demand certain things, especially governance-wise,” she said.
The portfolio manager, however, noted that the local investor community had improved in terms of holding companies accountable and investor responsibility was well developed. Asset managers in particular know exactly what they require from companies, how to engage with them and how issues can be improved.
“Before there wasn’t a lot of minority protection but now it’s getting better in terms of our investor community demanding certain things because ultimately we are the ones who invest in these companies.
“We give them money to go and invest and therefore we deserve a return that is consistent with the risk that we are taking when we go through these investments,” she said. PRI this week held an investor breakfast engagement on ESG integration and responsible investment. The event brought together local investors in collaboration with PRI signatories, Aleyo Capital, Kgori Capital and Norsad Finance. The event also empowered investors with the knowledge they need to make responsible investment decisions towards enhancing the sustainability of the local and global financial systems.
Members of the investor community, including shareholders, pension funds, asset managers and others gathered in Gaborone on Tuesday to discuss the need to make responsible investment decisions as well as enhance the sustainability of both the local and global financial system.
Kgori Capital co-sponsored the discussion together with Aleyo Capital and Norsad Finance.