Shareholder Voting Rights for International Investors In the US Market
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Investing in a US company means doing more than sitting back and waiting for your capital gains. For many traders, it means taking part in corporate votes. Shareholder voting rights allow even the smallest retail investors to take part in proxy votes at annual meetings and special events.
For international investors trading US stocks outside of American borders, do those shareholder voting rights still apply?
What can a retail investor's vote really do?
Compared to institutional investors and individuals with large amounts of equity, the average retail investor has a miniscule share of a public company. Still, if a retail investor holds voting shares, their vote counts. Collectively, these votes can help determine things like who will sit on the company's board and what decisions they'll make for the business moving forward.
Just look at Engine No. 1, a hedge fund that performed a boardroom coup on Exxon Mobil Corporation (NYSE:XOM) by getting shareholders to vote out old players and vote in sustainably minded board members. Now, Exxon has a few board members who are poised to make an eco-friendly impact in the company's future—without sacrificing stock value for shareholders.
Can international investors vote, too?
Some companies offer voting international shares for U.S. investors. Sometimes, these investors are institutional, meaning they come from a hedge fund or another big pool of money. Other times, these investors are individuals (aka retail investors).
International investors with voting shares often vote by proxy or through money managers. Proxy voting is just voting online, absent from the shareholder meeting (this is how most U.S. shareholders vote).
Consider your country of origin before proxy voting
The specifics of international shareholder voting depends on where the investor lives. While you can usually cast your vote through a fund manager, every country has its own rules and regulations regarding proxy voting. Since proxy voting is the most accessible (you can do it online), it's important to know where your country stands.
For example, UAE residents may have different proxy voting rules for US securities than French citizens. If you're in the UAE, you may check with the DIFC or DFSA to determine your place in US stock market voting events.
How to find out if you have voting international shares
Check your American depositary receipts (ADRs) or other types of US stocks to find out if you have voting international shares. You can do this by going to SEC.gov/EDGAR and find the company's prospectus. Search the document for voting rights and read them to ensure you hold the correct class of stock to take part in a vote.
What to know before you vote
Read through every question before submitting your vote. Look up company news to find out if there are any contentions regarding the vote. If there is a disagreement in the news, find both sides of the story. Maybe you want to stick with the existing company structure, or perhaps you'd like to bring in someone new. It all depends on the context.
As an international investor, you have the potential to make a change in US economics—simply through a shareholder vote.
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