Holding companies to account for their role in fuelling environmental and social crises.

Companies have shareholders, who each own a piece of the company. These include our pension funds. Every year, these shareholders are invited to a company’s AGM (annual general meeting) to make decisions about its future.

A shareholder resolution is a proposal submitted by the shareholder of a company to be voted on at these AGMs. These proposals direct the board to take some form of action – for example to pay their staff a Living Wage or to pull investment out of fossil fuels.

These resolutions run alongside others which are put forward by a company board – including resolutions that deal with matters such as accepting the company’s annual report and accounts, electing directors or appointing the company’s auditors.

Resolutions put forward – or filed - by shareholders are referred to as ‘Special Resolutions’. Similar to those put forward by the company’s board, they will be circulated to every shareholder, who will vote on the issue. A special resolution needs 75 per cent of shareholders to vote in favour for it to pass. If this happens, the company is then mandated to do what it says.

Shareholder resolutions can be an extremely impactful campaign tactic. Firstly, if the resolution passes, then a company is legally obliged to act on the proposals submitted within it – and then will have to answer to their shareholders on how they will action their asks.

However, even where a resolution doesn’t pass the high bar of 75 per cent of shareholder support, it is a useful tool for several reasons:

• It puts public scrutiny on a company: Companies don’t tend to like a spotlight being shone on their shortcomings, and resolutions are a great way to shine that light. They get people talking, and they tend to get a lot of airtime in the media, including many mainstream outlets. This puts pressure on a company to take actions to show they are taking these issues seriously.

• It puts an issue on the agenda: Gathering together a group of investors to demand companies change their ways is a great way to show a company you are serious. They can no longer hide from the issue, and have to work to address their investors concerns. And having a vote on the ballot of an AGM is also a great way to get more investors to take note of the issues. Investors are increasingly scrutinised over how they vote on resolutions so it is a great way to also ensure investors are taking these topics seriously.

• It gives investors a chance to step up: It also gives investors – like your pension funds – the chance to step up on an issue and show their beneficiaries that they take environmental and social concerns seriously – whether they are co-filing a resolution or voting on it at an AGM.

The best way to ‘win’ a resolution campaign is to secure enough investor votes that the resolution becomes binding and a company has to act on your demands. However, a special resolution needs 75 per cent of the vote to pass – which is a high bar. Luckily, this is not the only way to secure success. By putting public and investor pressure on a company, via the media and engagement meetings, you can often convince a company to accept some, if not all, of your demands, without the resolution having to go to a vote. This could be by making public commitments, or by putting their own resolution forward for a vote. By making these public declarations, companies open their actions up to greater scrutiny, and give us more leverage to ensure they are taking the right actions in the future. And if a resolution does go to a vote, it doesn’t always need to pass to drive change. If enough investors, or particularly large investors vote in favour, then a company and other investors will feel pressure to take action on an issue.

Yes, we’ve built a strong track record of using shareholder resolutions in our campaigns. In 2020 we co-filed a resolution at UK-based bank Barclays challenging it to align its lending with climate science and urging it to phase out fossil fuels. 24 per cent of shareholders backed our resolution and 10 per cent abstained from the vote. This sent a clear signal to Barclays and across the banking sector. The bank even released a net-zero strategy in response to our demands.

Following this success, in 2021 we filed two resolutions. We demanded HSBC pull their fossil fuels investments and called on Tesco to set targets on healthy food. Neither of these resolutions made it to the ballot, as we were able to secure major wins ahead of the vote. HSBC put forward its own resolution, meeting the majority of demands, which received over 99 per cent support. Meanwhile Tesco responded to our resolution by announcing a new commitment to increase its sale of healthier food.

To file a resolution, you need to secure the support of a significant grouping of a company’s shareholders. This can be shown in two ways:

1. Those filing a resolution own no less than five per cent of total voting rights of the shareholders entitled to vote on a shareholder resolution.
2. Those filing a resolution number at least 100, holding shares on which there has been paid an average sum per shareholder of not less than £100.

We take route number two – and that’s where you can get involved. To do this we need at least 100 company shareholders to be able to co-file. It is individuals like you, each owning a share, that helps us to meet this goal. We then work to bring larger investors on board too. As these own thousands of pounds worth of shares, they help bring our average per shareholder to over £100.

You just need one share in a company to be able to co-file a resolution. Once you have chosen which resolutions you want to be a part of, we’ll take you through the process of becoming a shareholder. Once you have a share, we’ll also point you in the direction of the relevant paperwork you will need to sign to co-file. It’s really that easy.

There are some risks to taking part. Even once you have a share, and have signed the paperwork to co-file, there is no guarantee of successfully co-filing. This could be for a number of reasons:

• To co-file we need at least 100 shareholders to support the resolution. Even with your support we might not reach this number.
• We also need big investors to support the resolution. These allow us to reach the average shareholding value of £100 required to co-file. We are working hard to secure this support, and have proven success in doing so, but there is a risk we won’t meet this threshold.
• If any documentation isn’t filled out correctly it could be rejected by our target company. We will offer tips along the way to help you ensure your paperwork is completed correctly to try to minimise this risk.
• We are already in conversation with the companies we are looking to co-file at. Sometimes just the threat of a resolution will drive them to take the actions we are asking for. This would be great! But would mean we would no-longer submit the resolution, as we would already have won!

Once you have co-filed with us, there is also a chance our resolution will not go to a vote at the company AGM.

• Between now and the resolution, we’ll be in continued conversations with the companies involved, and again they may meet our demands prior to the resolution going for a vote. We would see this as a win, and may choose to remove our resolution from the ballot.
• Similarly, a company may choose to put forward its own resolution on the topic. If we feel this is strong enough, and meets enough of our demands, we could choose to remove our resolution from the ballot. As a management backed resolution, the one put forward by a company would be much more likely to pass.

If the resolution doesn’t go ahead at your chosen company, your shares can still be used for other forms of campaigning. For example, we use shares in companies to go along to AGMs and ask questions on vital topics, like climate change, workforce issues and health. You can find out more about this here.

That’s ok – but before you can co-file with us you will need to own a share in the target company. We’ll take you through the process for this, and there are two options available to you:

• You can buy a share. With just one share you will become a shareholder and can therefore co-file a resolution with us.
• You can borrow a share. We’ll be buying a number of shares for each of the companies we are looking to co-file at, and will lend these shares out to individuals so that they can co-file with us.

Please note: We aim to lend shares so that as many people as possible can take part in our campaigns. If you are in a position to purchase a share, please do. This will allow others to also be able to take part.

Once you have shared your interest in co-filing with us, we’ll go ahead and buy a share in a company, and transfer this to you. You will receive a share certificate via the post, and can use this to co-file a resolution (we’ll send you an email and take you through the co-filing process).

After the campaign has ended, we ask that you transfer the share back to ShareAction so we can use this in our future campaigns. We’ll aim to make this as easy as possible. When it is time to return your borrowed share, we’ll send to all the forms you will need, pre-filled for you, along with stamped envelopes.

Once you have co-filed with us you can relax. We’ll be working behind the scenes, having conversations and continuing to put pressure on the target companies. We’ll keep you regularly updated about the progress of the resolution in the run up to the company AGM.

We might also be in touch with other opportunities for you to help us further to support the resolution and put pressure on the companies involved. So, keep an eye on your inbox!

• If you are buying a share: The costs of buying a share can vary from company to company, and there will always be transaction fees involved in the process. It is likely that purchasing a share could cost between £30 and £100 depending on the company. You’ll have to set up an account with a broker to buy a share, either online or over the phone, and then come back a fill out some forms to co-file. We expect this to take no more than 1-2 hours of your time in the coming weeks.
• If you are borrowing a share: As we’ll be lending you a share, this option will cost you nothing. You will also not need to go through the process of buy a share, you’ll just need to give us your details and then fill out some paperwork, so we expect this to take about 30 minutes in total.
• If you are using an existing share: You already own the share, so there will be no additional costs involved in co-filing. You’ll just need to register your details with us and fill out the paperwork. We expect this to take about 30 minutes.

There are two different routes you can go down to purchase a share – you can get a certificated share, or a share held in a nominee service. If you purchase a certificated share, the share will be held on the company register in your name, and you’ll receive a certificate. If you hold a share in a nominee service, it will be held on the company register in the name of your broker.

Certificated shares are more expensive. But we prefer this route as it makes the process of co-filing easier. Once you have your share certificate, you just need to provide the certificate number, and fill out the co-filing paperwork. There are additional steps involved for shares held under a nominee service, as you will need to ask your broker to send a written statement that you are the ultimate shareholder.

If money is a barrier and you're interested in the nominee service option and want more information on this, you can email resolutions@shareaction.org. Or why not choose to borrow a share? This is free and will save you time.

Yes, of course. If you are keen to use shares held in a nominee service, please email resolutions@shareaction.org and we’ll be happy to chat you through what you need to do to be able to co-file. Remember this process can take up to four weeks, so please don’t delay!

ShareAction can not give you legal, investment or tax advice and you may want to seek independent advice prior to becoming a co-filer. The following information represents selected, general guidance for individuals subject to tax in the UK, who buy or borrow a single share. It is not personal tax advice.

Most supporters who buy or borrow a single share in a company (or small number of companies to join more than one of our campaigns) will encounter no significant tax implications as a result.

The most likely tax implications you could encounter include:

1. Tax on dividends – shares can pay a small dividend (usually a few pence per share) on a quarterly or other basis. Normally, individuals can receive up to £2,000 per year in dividends before incurring tax. This allowance relates to all shares held and is not per individual shareholding.
2. Capital gains tax – if you sell a share that you’ve bought, you could be taxed on the increase in value (which is called a capital gain). Normally, individuals are exempt from capital gains for up to £12,300 per year, though this allowance covers capital gains from different sources (such as property). There will be no capital gain if you are transferring a borrowed share to us.

The above tax reliefs are based on the tax year to 5 April 2022. These may change each tax year.

If you are currently required to complete a self-assessment tax return then you would need to include the above items on the return. If you do not complete a return and the income from the shares falls within the above exemptions then, this extra income is unlikely to trigger a need to do so.

If you have any concerns regarding the above you should seek independent tax advice.

Once you have bought a share, or we have bought a share to lend you, it will normally take about two to three weeks for you to receive your certificate. But don’t worry, we’ll send you a reminder of next steps around this time!