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Are all shareholders equal?

In theory, all shares are equal. Each carries a single vote in company meetings, and in the UK, each normally has the same rights as any other. But this equality also means that those with most shares have most votes, and those who own the largest proportion of the company might be expected to have more influence.

Smaller shareholders often complain that this leads to inequality. Companies hold company days for institutional investors; smaller investors are not invited. The suspicion is that these provide large investors access to vital information not available to others. Ask any investor relations manager, and they’ll point out that part of their role is to make sure that this doesn’t happen. The art involves steering conversations away from rocky aspects that could be price sensitive.

So why have these meetings? They are to build confidence by giving fund managers a greater feel of the company strategy, to enable them to delve into the operational risks and challenges, and to discuss their concerns. Investors often cite the quality of management as an important factor in judging an investment and small meetings give investors a chance to assess executives in person and read their body language. Video calls, via Zoom or Teams or the like, create a barrier; phone calls are a stopgap. For senior executives, the value is in building long-term relationships. Well-informed investors are more likely to stand by the company during lean times, especially if potential issues have already been aired and fundraising is required.

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