If you had the power to improve your situation just by raising a hand, would you nonetheless refuse to exercise this power no matter how bad things are, no matter how much better they could be? A company’s shareholders have the power to effect meaningful change, thanks to their right to a proxy
vote at general meetings. Company law bestows this right with good reason: the issues on which votes are required are integral to the sustainability and performance of an investment. As always, the right to vote comes with a duty to use it wisely. Not doing so would be, at best, wasteful, if not downright irresponsible.

The obligation is amplified for asset managers (AMs), where failure to take voting seriously would also
be a dereliction of the fiduciary duty to act in their clients’ best interest. Returns cannot be maximised simply by voting with the feet; by invoking the so-called “Wall Street rule” and selling the shares. Particularly in the concentrated South African market, AMs often hold too large a stake to be able to disinvest without eroding the share price. Besides, a well-informed vote may not only prevent a loss: it has the power to create value by significantly improving the fundamentals of the underlying business.

For these reasons, and in light of recent global events, proxy voting has recently become the subject of
much attention as an essential tool for investment professionals to act as good stewards of their (and for AMs, their clients’) assets. Internationally, institutional investors have developed proxy voting policies, and voting records are closely monitored, in an attempt to ensure that the right to vote is used effectively. In order to determine how proxy votes are exercised on behalf of clients in South Africa, a study of most of the country’s larger AMs was conducted earlier this year, including a comprehensive analysis of their proxy voting policies and a series of wide-ranging interviews of senior personnel (see the margins of this report for selected AM’s interview responses).