Shareholder Engagement

Issuers are expected to actively engage shareholders and other stakeholders (including employees, customers, suppliers and partners). For an effective engagement, an issuer should set up meaningful two-way communication with shareholder and other stakeholder. This allows the issuer to solicit feedback on the issuer’s performance and understand views of its stakeholders. The Board should take such feedback and views into account when considering the issuer’s long term strategy.

Enhancing Communication

Ways in which issuers can enhance communications with shareholders and stakeholders include:

Appointing a suitably qualified senior investor relations officer who has access to the Board.
Enabling INEDs to provide a sounding board for the chairman in situations where the chairman is conflicted or unavailable to act.
Having INEDs serve as intermediaries between directors and shareholders (where contact through the normal communication channels are inappropriate or inadequate).
Formalising the Board’s availability and arranging periodic meetings with the shareholders as appropriate.
Enhancing disclosure in respect of INEDs’ contribution or work done during the year in the annual report.
Disclosing quantitative metrics of INEDs’ engagement with the independent shareholders, including number of meetings held.

Information Sharing

It is essential for the shareholders to understand the actions taken by an issuer and assess whether an issuer can create value going forward. Scenarios where issuers are expected to provide further information to shareholders are set out below.

Director Appointment

How does a director’s appointment contribute positively to the Board and fit into the succession plans of the issuer.
How does the remuneration package of a newly appointed director support the company’s pay policy.

Notifiable and Connected Transactions

How was the relevant transaction introduced to the Board, and what are the rationale and commercial benefits for the transaction.
Which factors did the Board evaluate when considering the transaction (for example, risks, valuation, discount rates, terminal values, relevant peer comparisons, financing considerations, balance sheet impact).
Were there any dissenting views when the transaction was approved.

Business Outlook

How are the issuer’s purpose, values and strategy connected to its business model.
What is the issuer’s broad business strategy going forward, e.g. short or long term strategic plans.

What are the contingency plans, e.g. an issuer’s plans to cope with an economic downturn, a natural disaster or a global pandemic (as appropriate).

Our Guidance Materials

The Exchange has developed training and published comprehensive guidance materials on shareholder engagement. Several external resources provide additional guidance on this subject.

Publication and Training
External Resources