Communication between state-owned public companies and retail investors: regulators’ recommendations
The Bank of Russia and the Russian Ministry of Finance encourage state-owned companies whose shares are publicly traded to build relationships with retail investors in accordance with best practices. They are based on the principles of information transparency and protection of minority shareholder rights.
When making corporate decisions, issuers should take into account the interests of retail shareholders who want to be confident in a company’s long-term stability, receive dividends, and see share prices grow. Therefore, companies are advised to join the Shareholder Value Creation Programme.
Regulators recommend that issuers be more transparent and keep minority shareholders informed about a company’s development strategy, operational and financial goals, as well as current performance indicators. The above information should be communicated clearly, using visual aids. These data should also be disclosed in a company’s annual report, which is a key source of information for investors.
Furthermore, companies are advised to improve their channels of communication with investors as well as prioritise resources providing a broad reach and allowing them to receive feedback. In addition to traditional formats (press releases and website sections), regulators suggest that issuers organise meetings with the management and various conferences for minority shareholders, run social media accounts and podcasts, as well as develop special mobile apps.
Issuers should pay particular attention to engaging retail investors in a company’s activity by offering them an opportunity to participate in its management and decision-making on important matters through nominating their candidates to the board of directors. It is considered good practice for a company to have a Minority Shareholder Committee.
According to the Bank of Russia’s estimates, these recommendations will help establish a new standard of communication between major issuers and their retail shareholders. This will harmonise different corporate practices, enhance investors’ trust, and contribute to stock market capitalisation.