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What Is Investor Engagement?

Posted May 20, 2019 by EasyFinance.com to Investing 1 0

Investor engagement is something that keeps evolving, which means that organizations have to adapt in order to engage and even strengthen their shareholders. They're important, considering how they are the one providing the investment which keeps your business moving ahead. Hopefully, you're dutifully rewarding them with increases in their share values. Having said that, there are a handful of simple tips you can use to keep things running smoothly on a daily basis.

Communication Is Crucial

You must build solid and communicative relationships with your investors. It helps you learn what their priorities are. As a result, it makes it easier to establish an ongoing, mutual understanding of the objectives of your company, which is a great way of mitigating risk of there being hostility directed towards management. Shareholder engagement is something that has to be considered a continuous and even strategic process.

When you handle shareholder communications, you should think about specific things like the following:

Q&A forums that invite emails so you're able to get a handle on the questions being asked, of course subject to any applicable regulatory constraints.

Offering information to your shareholders so they better understand not only your company, but have full understanding of corporate governance,  the industry, and any other future plans.

Offering quarterly updates to every shareholder.

"Investor Open Days" where they can tour the company and possibly meet the board members.

Announcements of price-sensitive information.

Treat every investor and shareholder fairly and equally.

Act on any shareholder suggestions you think might be advantageous when you have the power to do so.

Permit No Surprises

When you are communicating with your shareholders, you also need to be honest with them. Any company is going to have its ups and downs, and you might be tempted to spin temporary slowdowns and bumps in the road. Over the long haul, though, you'll get a lot more confidence from your shareholders if you're honest with them and take feedback from them early on. Good numbers do satisfy shareholders and obviously should be shared with them. On the other hand, when you have troubles, you need to explain why this is going on as well as what course of action you've chosen. There will invariably be some factors in your control and some that are not. Explain the challenges you are facing as well as your thoughts about how you'll overcome them.

Be Ready For The Unexpected

Irrespective of the industry you're doing business in, it's crucial to be sure that your company is protected with a good safety net. That's not only important for the company, but also so every shareholder has peace of mind.

In terms of limited company shareholders, shareholder protection insurance might come into play.

Simply put, shareholder protection insurance means that the events following the death of a shareholder will prove seamless and free of stress. In the event of this happening, any continuing shareholders typically want to maintain control over the company, and they don't want any outgoing shareholder's shares getting passed on to someone that has no particular interest in the business or to a third party which they might not be able to work with amicably.

As part of this protection, there should be a specific business continuation agreement drawn up among the shareholders which sets out the particulars for disposing of shared for an incapacitated or deceased shareholder. This agreement will be supported via a sequence of interlocking life assurance trusts and policies, which provide the financing for a tax-efficient buyout of any relevant shareholding at its fully proportionate value. The legal provisions of a protection will play a crucial role in making sure that shares and monies wind up in the hands of the proper parties.

With shareholder protection insurance taken out, shareholders will enjoy the peace of mind that if a fellow investor should pass away, then the surviving shareholders won't have to concern themselves with finding the money or resources to purchase assets. Rather, they'll get pay-out funds which let them purchase the shares of the deceased efficiently and quickly. That means business can get back to normal as fast as is possible.

Offer A Dividend Policy

Dividends sometimes form the bulk of investment returns for a business. They might also be the reason many investors primarily own a certain stock. Dividend policy is a crucial component to the investment sharing process, as it enforces a robust cash discipline on a management team. The right dividend policy will also convey a message regarding the fiscal health of a company, as well as its future prospects.

Shareholder Benefits

While investments are best chosen for their potential capital growth and dividends, shareholder perks can always be a nice bonus. Shares really shouldn't be bought just for the perks, but the addition of perks might make share ownership more desirable, which assists the maintenance of good shareholder relationships.

In Conclusion

Shareholders play crucial roles in the operations of any company.

As investors, they've got stakes in both the present and the future of the company, given how corporate profits are the only way they might recoup their investment. As such, business success is in the best interests of both the shareholders and the company.

The relationship between these two parties can have a substantial impact on the success of the company, which means that it's imperative to establish and maintain healthy working relationships.

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