As the number of new issuers in the capital market continues to grow and the investor base expands, an increasingly important question is whether shareholders are aware of, and fully exercise, their rights and opportunities. This article examines the ways in which investors can participate in corporate governance and the benefits of doing so.
The General Meeting of Shareholders – A Key Platform for Participation
Shareholders exercise their rights to participate in an issuer’s governance by attending the general meeting of shareholders. This enables them to receive important information while effectively protecting and enhancing the value of their investment.
The general meeting of shareholders is the highest decision-making body of a joint-stock company. It adopts the company’s most significant decisions, including the allocation of profits (including dividend distributions), the election of supervisory board members, remuneration matters, and other issues related to the company’s development.
Participating in a general meeting is an active way for shareholders to oversee their investment.
Under the Latvian Commercial Law, participation in a shareholders’ meeting is not limited to attending the meeting in person. The Commercial Law grants shareholders a number of important rights, including the right to:
- request the convening of an extraordinary general meeting, specifying the reasons for convening it and the proposed agenda (Section 270);
- obtain continuous access to the documents to be considered at the meeting from the date on which the notice convening the meeting is sent (Section 273¹);
- request the inclusion of additional items on the agenda by submitting draft resolutions or explanatory information on matters for which no decision is to be adopted (Section 274);
- receive from the management board, no later than three days before the meeting, the requested information regarding agenda items (Section 276);
- vote on agenda items in proportion to the total nominal value of the voting shares owned by the shareholder (Section 279);
- access the minutes of the meeting, or an extract thereof, on the company’s website within 14 days after the meeting, including at least information on the amount of share capital represented and the resolutions adopted (Section 285);
- bring legal action to have a resolution of the shareholders’ meeting declared invalid (Section 287);
- obtain information from the company about other shareholders for the purpose of exercising collective shareholder rights (Section 236²);
- request an audit of the management board’s activities in cases provided for by law (Section 292).
Remote Participation – An Opportunity That Continues to Develop
Shareholders may exercise their right to vote before the shareholders’ meeting or participate and vote during the meeting using electronic means of communication. These rights and the procedures for exercising them are governed by Section 277¹ of the Commercial Law.
A shareholder who votes before the meeting or participates and votes electronically is deemed to be present at the meeting and is included in the list of shareholders prepared by the management board. In such cases, the list also specifies the manner in which the shareholder participated or voted.
However, not all issuers provide shareholders with comprehensive opportunities for remote participation.
Shareholders should familiarise themselves in advance with the procedures for each meeting and the available participation mechanisms in order to avoid unpleasant surprises or unnecessary restrictions on exercising their rights.
According to Section 277¹ of the Commercial Law, a company may provide in its articles of association that shareholders are entitled to participate in or vote at shareholders’ meetings using electronic means of communication. In such cases, the articles of association either establish, or authorise the management board to establish, the requirements for shareholder identification and the procedures for exercising these rights.
In practice, only some issuers explicitly provide for remote participation in their articles of association. Nevertheless, this is not a mandatory prerequisite for allowing shareholders to participate or vote remotely. Some issuers whose articles do not expressly provide for remote participation nevertheless make this option available at the initiative of their management boards.
How Remote Shareholder Meetings Work in Practice
In practice, remote participation is typically facilitated through online meeting platforms such as Microsoft Teams or Zoom, combined with video-based identity verification.
During remote meetings, voting usually takes place at the invitation of the meeting chair, with shareholders either raising their virtual hand or indicating their vote through the meeting chat.
Some issuers allow shareholders to ask questions and participate in discussions both verbally and through the chat function. Others do not provide an opportunity to ask questions or participate in discussions during remote meetings.
There are also issuers that allow shareholders to attend meetings remotely only in view-only mode, meaning shareholders can observe the meeting but cannot vote, ask questions or participate in discussions. Some issuers do not offer any form of remote participation at all.
Voting Before the Meeting
Most issuers provide shareholders with the option to vote before the meeting, rather than allowing remote voting during the meeting itself.
Typically, the notice convening the meeting clearly states that voting forms must be submitted at least one day before the meeting and explains the available voting methods in detail.
Common voting methods include:
- a voting form signed with a qualified electronic signature and submitted by e-mail;
- a voting form sent by post;
- personal delivery of the voting form;
- delivery by courier;
- voting through a dedicated electronic information system.
Where a shareholder submits a voting form in person, their identity is verified using an official identity document.
If a signed paper voting form is received, ownership of the shares is verified against the shareholder register. Some issuers also require shareholders to submit a copy of their identity document together with the voting form.
Upon request, issuers may provide shareholders with confirmation that their vote has been received.
Timely preparation transforms formal participation into meaningful engagement.
To minimise the risk that participation is hindered by technical or organisational issues, shareholders are encouraged to review the meeting notice well in advance, paying particular attention to the procedures for participation and voting. Such a proactive approach enables shareholders to exercise their rights effectively, regardless of the meeting format.
The Role of Minority Shareholders in the Capital Market
Minority shareholders constitute an important part of the capital market ecosystem. Although their individual voting power may appear limited, collectively they can significantly influence corporate decisions and governance practices.
Active minority shareholders contribute to greater corporate transparency, improve the quality of corporate governance, and strengthen investor confidence in the market. In the long term, this promotes a more stable, sustainable and resilient capital market.
For minority shareholders, participating in general meetings provides several important benefits:
- Greater control over their investment by enabling them to express their views on matters affecting their economic interests.
- Better access to information, as direct communication with the company helps shareholders understand how it is managed and what risks and opportunities lie ahead.
- Greater influence through collective action. While a single vote may seem insignificant, when combined with the votes of other minority shareholders it can become decisive and contribute to positive change.
