By Dean Little, CEO and Co-Founder of Proxymity

Governance demands on proxy voting systems have never been greater. Activist campaigns in 2025 were the highest on record, meaning more boards faced contested votes and public pressure from investors than in any recent year. At the same time, major asset managers are fragmenting their stewardship operations and pass-through voting programmes are bringing retail investors into the process at scale.

As a result, the infrastructure that underpins proxy voting programmes needs to be urgently modernised to keep up with the growing demands of an engaged, international investor base. While some progress has been made in digitising shareholder communications, further steps are needed to deliver real-time transparency across the entire intermediary chain, from the distribution of meeting notices through to the confirmation of votes. Rather than simply digitising ballot papers or relying on marginally improved processes, these efforts should address the underlying  limitations of legacy  processes.

Key challenges

The chain of intermediaries, messaging formats, and manual processes connecting an issuer's boardroom to an investor's ballot largely remains one of the least modernised parts of capital markets. Votes are delayed or lost at each handoff. Investors in many markets still cannot confirm whether their vote was counted. As the gap between what systems are asked to deliver and what they can actually handle widens, the operational layer of shareholder voting is fast becoming a governance risk in its own right.

A single AGM notification can take a complex route, passing through registrars, custodians, sub-custodians, and through various messaging protocols, and jurisdictions before reaching the final investor. At each stage, information can be delayed, distorted, or lost. Deadlines get tighter, reconciliation becomes uncertain, and many investors remain unsure if their vote, which has to travel back via the same chain, was registered or recorded accurately.

That matters more now than ever, as the 2026 proxy season is expected to see sustained high levels of shareholder activism and more unpredictable voting outcomes, reflecting a market already operating at near-record levels of engagement.

BlackRock, State Street, and Vanguard have all reorganised their stewardship teams, the internal groups responsible for deciding how an institution votes its shares at company meetings. Until recently, a single stewardship team would assess a resolution and cast a unified vote across the firm's entire holding. Now, with separate teams covering index, active, and sustainability-focused portfolios, the same institution can vote different ways on the same resolution depending on which fund holds the shares. This multiplies the volume and complexity of voting instructions flowing through the system.

Furthermore, pass-through voting programs now allow individual investors in mutual funds to direct how their proportionate share of votes is cast at company meetings, rather than leaving that decision entirely to the fund manager. It marks the first time retail investors have had participation at this scale.

This diversification of voting pattern will make it harder for issuers to engage with a wider and more diverse group of investors, making voting patterns more unpredictable.

Complexities of cross-border voting

Cross-border voting is where these pressures converge. Not only does a single proxy vote pass through registrars, depositaries, sub-custodians, global custodians, and third-party service providers before reaching the issuer, the intermediaries or agents inbetween have to manage different record dates, holdings restrictions and additional paper work or POA’s to vote effectively.   Each handoff and process adding delay and the potential for data to be lost or distorted, this is even before the cost is brought into focus. Markets need to modernise or risk losing the participation of their international investor base entirely.

Australia illustrates what happens when a market commits to addressing this. In 2012, the Australian Council of Superannuation Investors identified major weaknesses in the proxy chain: delayed ballots, limited visibility of underlying holdings, and frequent mismatches between votes cast and votes recorded.

After a concerted shift to digital infrastructure, institutional votes processed through digital platforms in Australia rose 150% year-on-year in 2024 alone. Meanwhile, many other jurisdictions still rely on manual cross-border workflows and outdated messaging standards, and long-term participation rates reflect it. Institutional voting globally fell to 76.6% in 2025, its lowest level in a decade.

Building the infrastructure required

While Australia has acted decisively, progress elsewhere remains uneven. Elements of the proxy voting process have been digitised in many markets, and major institutions are experimenting with automated voting tools to improve efficiency. But these are partial steps. Fully connected systems that provide real-time transparency from meeting announcement to vote confirmation are far from universal. In many jurisdictions, the chain remains fragmented, with digital and manual processes running side by side, creating gaps where data is lost and participation suffers.

According to the OECD, improving the efficiency and transparency of shareholder voting systems is now a priority for strengthening global corporate governance frameworks, particularly as cross-border investment continues to grow.

Our own experience reflects the scale of the shift required. Proxymity now serves 96 of the FTSE 100 and works with seven of the world's top ten global custodians across more than 105 markets. What we see consistently is that the technology exists, but coordinating its adoption across every link in the intermediary chain remains challenging.

Some of our recent partnerships illustrate how the industry in different countries is responding. In Europe, where post-trade infrastructure providers are increasingly looking to embed digital governance into their core services, Euroclear has made a strategic investment in Proxymity and become a client, integrating digital proxy voting capabilities into its post-trade operations. In Asia, our partnership in Taiwan, with central market infrastructures such as the Taiwan Depository and Clearing Corporation (TDCC) now give foreign institutional investors direct digital access to cross-border voting infrastructure that previously required manual intervention at every stage.

These organisations jointly recognise a new reality: the operational systems underpinning shareholder voting are no longer a purely back-office concern. They are a governance priority. The governance expectations of regulators, investors, and companies have evolved far more quickly than the infrastructure designed to support them. Bridging this gap is now critical. Ultimately, we need those running operational systems to match their goals with issuer demands and regulators’ ambitions to ensure that shareholder voting can meet the needs of a more transparent, accountable, and globally connected market.

Looking ahead, as shareholder participation continues to expand and voting behaviours become more complex, markets that fail to modernise risk not only operational inefficiencies but also a decline in investor confidence.