By Jonathan Smalley, COO and Co-Founder of Proxymity

The 2025 AGM season has started with notable shareholder tensions, highlighted by Saba Capital’s aggressive takeover bids and a sharp rise in contested votes in the UK. A 35% increase in the rejection of resolutions by shareholders in the FTSE 350[1] in recent years highlights a growing demand for transparency, accountability, and stronger alignment between investors and corporate boards.

Macroeconomic shifts, including Trump’s policy agenda in the US and ongoing Labour Party developments, such as reforms to pension regulations and the introduction of Audit Reform and Corporate Governance Bill, are expected to further fuel activism during the 2025 AGM season in both the US and UK.

With investors increasingly scrutinising governance practices, the need for clear, open communication has never been greater. Technology, such as Proxymity’s Vote Connect and Shareholder Insights solutions, which are utilised by 87 of the FTSE 100, will continue to have a key role in facilitating seamless communication and ensuring it is accessible to all parties, addressing the current needs of investors and companies. Proxymity recently secured $26 million in financing from existing investors, including BNP Paribas, BNY, Citi, J.P. Morgan and State Street to further enhance its technology and continue its geographic expansion.

Regulatory scrutiny intensifies on shareholder activism

Shareholder activism continues to gain traction in the UK, with high-profile campaigns such as power struggles between Frasers Group and Boohoo, and MS Galleon’s shareholder revolt at Topps Tiles.[2] These cases reflect a broader trend of investors challenging board decisions on performance, governance, and social issues.

Meanwhile, regulatory scrutiny is also on the rise in the US. The Securities and Exchange Commission (SEC) has recently proposed new regulations requiring enhanced disclosure of environmental, social, and governance (ESG) risks.[3] This comes as a response to increasing investor pressure for transparency on climate and sustainability risks. Additionally, the SEC has introduced reforms to proxy rules, aiming to ensure that shareholders have timely access to key information for informed decision-making.

The regulatory scrutiny is increasing in the UK as well, with growing calls for stricter oversight in the corporate governance landscape. The Financial Conduct Authority (FCA) has been urged to tighten oversight on cases like Saba Capital’s takeover attempts, aiming to safeguard retail investors from undue influence. Enhanced disclosure requirements and potential penalties for non-compliance are placing further pressure on companies to engage proactively with shareholders, demonstrating a commitment to good governance and investor protection.

This emphasis on stricter oversight is further reflected in heightened enforcement of governance standards. Cases involving shareholder campaigns for executive compensation transparency and board diversity have attracted regulatory attention, putting additional pressure on companies to strengthen their engagement practices. This growing focus on regulatory reform highlights the importance of transparency and accountability in ensuring a fair and well-governed market for all stakeholders.

The rise of retail investor influence

The US has seen a significant rise in retail investor engagement. A recent industry report highlighted  that younger investors now hold a growing share of total assets and are demanding more direct participation in governance matters.[4] This has led to a surge in pass-through voting initiatives, which give retail investors in mutual funds a direct say in proxy votes. This trend has encouraged U.S. firms to adopt digital solutions to meet the expectations of these increasingly vocal stakeholders.

However, while activist shareholders are becoming increasingly assertive, a significant proportion of retail investors remain disengaged. Many only vote when dissatisfied, contributing to unpredictable AGM outcomes. A recent report found that 40% of retail investors in the UK fail to participate in governance decisions,[5] citing barriers such as complex voting processes and insufficient information.

However, a shift is occurring. Gen Z investors are demonstrating increasing engagement, with 37% of Gen Z now investing in stocks and four in five Gen Z shareholders saying that they have already voted in an AGM.[6] The 2024 AGM season saw an 18% rise in governance-related shareholder proposals[7], further indicating the growing involvement of retail investors.

Pass-through voting, which enables fund investors to have direct input in proxy votes, is gaining traction in the UK and Europe. This development empowers investors to have a stronger say in governance matters and is expected to reshape shareholder participation in the coming years.

Impact of Trump’s deregulation and shareholder behaviour

In the US, Trump’s deregulation agenda, particularly in energy, finance, and manufacturing, has encouraged companies to adopt aggressive strategies often conflicting with long-term sustainability goals. Rollbacks on environmental and financial regulations, such as eased carbon emission standards have led to increased corporate risk-taking.

This has raised concerns among global investors, many of whom prioritise ESG criteria. Institutional investors are pushing for stronger governance, transparency on climate risks, and ethical practices to safeguard shareholder value. The international ripple effect is prompting greater cross-border shareholder activism, with UK and European investors urging reforms to align companies with higher governance standards.

Digital transformation as key to modern shareholder engagement

With shareholder activism intensifying, digital transformation is essential. A survey by the National Investor Relations Institute (NIRI) found that 75% of investors prefer receiving digital updates from companies. As of right now, the satisfaction level remains low, with 60% of these investors expressing dissatisfaction with current communication methods.  

With increasing issues around lack of clarity and responsiveness, in the UK companies including BP, Shell, BAE Systems, and National Grid are advocating for fully digital shareholder registers, recognising the need for seamless investor participation. A shift toward digital shareholder registers would allow investors to receive timely updates, exercise their voting rights more efficiently, and engage more actively with company management. However, despite the push for modernisation, 66% of FTSE 350 companies still held their AGMs in person in 2024,[8] highlighting the slow pace of adoption in the UK.

In contrast, the U.S. has seen more significant progress, with 70% of shareholder meetings held virtually in the post-pandemic period, though this is a decrease from the 81% peak during the pandemic.[9] This shift demonstrates that U.S. companies are increasingly recognising the advantages of digital shareholder meetings, particularly in terms of accessibility and efficiency.

Proxymity’s Vote Connect solution is at the forefront of this shift, facilitating real-time communication between issuers and investors. This platform facilitates real-time communication between issuers and investors, enabling companies to streamline meeting notifications, proxy voting, and live vote tracking. By integrating digital tools, companies can enhance transparency, improve governance practices, and foster continuous shareholder engagement throughout the year, rather than limiting interactions to periodic AGMs.

Embracing the future of shareholder engagement

The combination of rising activism, increased regulatory oversight, and evolving investor demographics presents both challenges and opportunities for UK and US businesses. For instance, in the first half of 2024, the U.S. experienced a 15% increase in shareholder activism, with 61 campaigns launched compared to 53 during the same period in 2023,[10] reflecting growing changes within the investor sentiment. To successfully navigate this landscape, companies need to  embrace digitalisation and proactive communication.

By leveraging innovative solutions such as Proxymity’s Vote Connect and Shareholder Insights, firms can create a more engaged, transparent, and collaborative governance ecosystem. These digital innovations enable businesses to facilitate real-time communication, improve accessibility to key corporate decisions, and encourage broader investor participation.

As the 2025 AGM season approaches, technology will play an instrumental role in bridging the gap between issuers and shareholders, ensuring that governance practices evolve in line with modern expectations. By integrating digital solutions, companies can ensure that their corporate strategy and shareholder interests are aligned, ultimately fostering sustainable, long-term value creation.

[1] https://the-cfo.io/2024/04/12/shareholders-of-uk-listed-companies-increasingly-reject-resolutions-at-agms/

[2] https://www.cityam.com/topps-tiles-investors-stage-revolt-as-shares-nose-dive/

[3] https://www.sec.gov/newsroom/press-releases/2024-31

[4] https://www.broadridge.com/press-release/2024/broadridge-us-investor-study-highlights-growth

[5] https://www.fca.org.uk/news/press-releases/fca-finds-two-thirds-young-investors-take-less-24-hours-make-investment-decisions

[6] https://ifamagazine.com/virtual-inclusivity-and-the-gen-z-investor-the-changing-face-of-agms/

[7] https://www.governance-intelligence.com/shareholders-activism/record-breaking-shareholder-proposals-2024-focus-esg-and-anti-esg-matters#:~:text=Regarding%20ESG%2Drelated%20proposals%2C%20the,percent%20and%205%20percent%2C%20respectively.

[8] https://www.whitecase.com/insight-alert/ftse-350-snapshot-agm-key-trends-november-2024-update#:~:text=Increased%20authorities%3A%20In%20line%20with,companies%20between%20November%202022%20and

[9] https://corpgov.law.harvard.edu/2024/07/18/partisan-politics-and-annual-shareholder-meeting-formats/

[10] https://www.ib.barclays/our-insights/shareholder-activism-surged-2024.html#:~:text=Globally%2C%20243%20activist%20campaigns%20were,over%2Dyear%20to%20115%20campaigns.