Top 5 tips for maintaining relationships with your shareholders

The shareholder-base of companies is changing and becoming much more vocal. Investors are increasingly taking a more active interest in all company issues.

As investor engagement continues to evolve, organisations must adapt to strengthen and engage with their shareholders, after all they provide the investment that keeps your company moving forward. While you will hopefully be rewarding them by increasing the value of their shares, you can also keep things running smoothly day to day with a number of simple tips.

Communication is key

Building a solid, communicative relationship with investors is a must. It will help you to understand their priorities. In turn, this will help to ensure there is a continuous and mutual understanding of the company objectives, and can mitigate the risk of any hostility towards management. Shareholder engagement needs to be regarded as a strategic, ongoing process.

In your shareholder communications, consider things such as:

  • A Q&A forum inviting emails so that we can get a steer on what questions are being asked (subject to regulatory constraints).
  • Provide information to shareholders to better understand the business, industry, and any future plans.
  • Provide quarterly updates to all shareholders.
  • “Investor Open Days” including things such as a walkabout of the business and a chance to meet board members.
  • Announce price sensitive information.
  • Treat all shareholders and investors equally and fairly.
  • Act on shareholder suggestions where you have the capacity and think that it will be beneficial.

No surprises

When communicating it is also important to be honest with your shareholders. Any business will have ups and downs, and you may be tempted to talk down a temporary set-back or slow down. In the long term, your shareholder’s confidence will be gained far more by being honest with them and accepting feedback in the early days. Good numbers will satisfy shareholders and should obviously be shared amongst the investors. However, when there are troubles, explain why and what your course of action is. Some factors are within your control and others are not. Explain challenges and your thoughts on how to overcome them.

Prepare for the unexpected

Regardless of the industry you operate in, it is essential to ensure that you protect your business with a safety net, not only for the business but for the peace of mind of each shareholder.

This is where a shareholder protection insurance can come into play for limited company shareholders.

Put simply, shareholder protection insurance is designed to ensure that the aftermath of a shareholder’s death is a smooth and stress free as possible. If this happens, the continuing shareholders will usually want to keep control of the company as they won’t want the outgoing shareholder’s shares passing to someone with no interest in the company, or to a third party that they can’t amicably work with.

As part of the protection, a business continuation agreement is drawn up between shareholders, setting out the rules for disposal of the shares of a deceased or incapacitated shareholder. The agreement is supported by a series of interlocking life assurance policies and trusts, providing the finance to a tax-efficient buy out of the relevant shareholding for its full proportionate value. The legal provisions of the protection play a key role in ensuring to ensure monies and shares go to the correct parties.

By taking out shareholder protection insurance, shareholders enjoy the total peace of mind that should a fellow investor pass away, the surviving shareholders will not have to worry about finding the money to purchase assets. Instead, they will receive pay-out funds that allow them to buy up the deceased’s shares quickly and efficiently. This means business can return to normal as quickly as possible.

Have a dividend policy

Dividends can make up a large chunk of the return from investing in a company and for that reason are seen by many investors as a key reason for owning stock. Dividend policy is a key part of the investment sharing process and it enforces a strong cash discipline on the management team. Dividend policy also conveys a message about the financial health of a business and its future prospects.

Shareholder benefits

While investments should be chosen for their potential dividends and capital growth, shareholder perks can be a bonus. We don’t believe shares should be bought purely for the perk, the addition of the perk can make owning the share more desirable and assist nicely in maintaining a good relationship with the shareholder.


Shareholders play an incredibly important role in the life of a business.

As investors, they have a stake in the business’s present and future, since the only way they can recoup their investment is through company profits. It is therefore in the interests of both the company and the shareholders that the business succeeds.

The relationship between both parties can have a critical effect of the success of the business, therefore building and maintaining a healthy working relationship is essential.

Mark Russel DipPFS, Independent Financial Adviser, True Bearing Chartered Financial Planners


To discuss your financial needs with Mark or any of the True Bearing Financial Advisers please call 01257 260011 or email