African Investor Relations

This is the first part of a 5 part series of FAQs we receive from clients. From the horse’s mouth.

In order to manage shareholder communication and proxy information on line and immediately distributed to shareholders and analysts; -our concern is that some of our shareholders do not have email addresses/internet access/computers, how is this then managed outside of our company?

Listed companies have a corporate governance obligation to use all means available to it to communicate with shareholders. No method of communication is perfect. This obligation funnily enough is not enshrined in law and this is one reason why it does not receive the attention of directors.

The website, printed copy, adverts, SMS, search engine optimisation etc are all media through which these messages can be delivered. In the modern day the costs of doing some of these can be negligible e.g. emails. On the other hand, in the modern day the postal system, especially in Africa, is very inefficient and costly.

Many shareholders (especially retail shareholders) own their shares through “nominees”, so never get their shareholder voting or other material. The option of using new media enhances shareholder governance and this benefits corporate reputation if company combines communication with corporate brand.

So there’s no one best way of communicating it’s a mixture of a number of ways in a manner that cost effective and gives shareholders what they need.

In short there’s nothing you can do about those investors that do not have access to email or computers. The efforts of a listed company to communicate with their shareholders are therefore two-fold:-

BOTTOM UP – your company sends information to your shareholders in your shareholder list at a particular point in time. This is not fool proof because of nominees and inefficiencies in the postal system.

TOP DOWN – any shareholder, whether they be registered in nominees or directly can come to your website and make educated investment decisions and obtain timely and comprehensive information to support these decisions.

Between the top down and the bottom up approach your company will have most bases covered.

Continue Reading

There are three types of Directors in charge of investor relations:-

The first type. The ones that make it their personal mission to attend investor conferences wherever they are. Generous allowances can be claimed, air-miles are racked up and the opportunity to see the World is embraced whole heartedly. They are the main source of information. This can be costly, in monetary and management time terms.

The second type. The ones that do not wish to see investors. They are too busy. When they do see them investors ask the same things over and over again and they view this as a waste of time. This bears little cash cost but its bad corporate governance.

The third type. The clever ones. They have an interactive website, take queries through it and participate in conference calls. They service the needs of their investors, they save the company money and they have the time to do their jobs.

I have had some feedback from investors that their efforts to meet with managements of listed companies are fruitless. I am fully aware that executives are busy, but if they just applied their mind to the investor relations function for 5 minutes there can be a win-win situation.

The fact is that many professional investors do like to meet management face-to-face. So they can stare into their eyes to see if they are lying!!

From executives’ perspective there has to be middle-ground between having their daily management schedule interrupted by investors and managing their business. Conference calls are that middle ground. Executives can respond to all major investors’ queries in a single phone call. The transcript of this call and the audio can be available on your website within 12 hours. Plus the call can be listened to live through your website. These investors should not disturb executives for some time thereafter. If they do the standard response is go to the website!

A conference call to sort out investor queries enables executives to go back to doing what they do best. If not, they should grant their investors a meeting – after all they own the company don’t they?

Please note that I am referring here to executives looking after routine reporting initiatives. When there is a capital raise or a similar corporate action the need to engage investors becomes more focused and will demand a more proactive approach.

Continue Reading