Small shareholder communications in Maltese listed companies : an analysis

Abstract

PURPOSE: The primary objective of the study is to evaluate the relationship between Maltese listed companies and their small shareholders. Like in any other relationship, communication is crucial and thus, this study assesses how both Maltese listed companies and the small shareholder perceive this mutual relationship. Furthermore, potential improvements are also suggested in order to enhance such relationship.

DESIGN: The aforementioned purpose of the dissertation was achieved through the use of a convergent mixed-methods research design. Semi-structured interviews were conducted with a number of company secretaries of Maltese listed companies. An additional interview was conducted with a representative from the Malta Association of Small Shareholder. Furthermore, a short questionnaire was address to local small shareholders.

FINDINGS: This study unveiled the absence of a proper distinction between a small shareholder and a minority shareholder. Nonetheless, local small shareholders perceive their companies as treating them rather fairly and are responsive with their communication. On the other hand there is still a lot of work to be done regarding the primitive voting systems utilised locally. Furthermore, there are legislative restrictions limiting the use of technology when it comes to Maltese listed companies sending out communication to their shareholders. Having said this, when it comes to shareholder protections, there are sound provisions in Maltese legislation mainly under Article 402 of the Companies Act.

CONCLUSIONS: In Malta there is a generally positive relationship between the listed companies and their small shareholders. Both parties involved confirm that decent communication is exercised between the two. However, despite the legal provisions against shareholder mistreatment, none of these are specifically aimed at small shareholders, which may ultimately be the ones needing it most, hence the need for a proper definition in legislation.

VALUE: Since this study is the first to evaluate the small shareholder relationship with local listed companies in terms of communication, it adds up to local literature regarding the topic. Additionally, a number of recommendations and areas for further research were also put forward, to further improve such relationship.