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Faces of Modern CFO's
Equity Operations

Best Practices for Utilizing Shareholder Portals

Nth Round

I

May 20, 2024

The Power of Shareholder Portals in the Digital Age

Clear and consistent communication with key stakeholder groups is at the top of the list for many private companies looking to meet modern expectations. This extends especially to shareholders—keeping them informed about critical matters such as company performance, equity ownership, and upcoming events.

Shareholder portals, sometimes referred to as investor portals or LP portals, serve as powerful tools for fostering transparency and engagement with your cohorts of owners, be they employees or NextGen family members. These secure online platforms provide a centralized location for shareholders to access essential information, streamline communication, and participate in important activities.

Unlocking the Benefits of Shareholder Portals

Shareholder portals provide a centralized, secure, and efficient platform for managing and disseminating equity-related information. Utilizing shareholder portals offers benefits for both private companies and their stakeholders. 

Let’s take a look at some key advantages:

  • Enhanced Transparency: Shareholder portals provide a centralized repository for tax documents, Schedule K-1s, stock certificates, valuations, proxy voting, and more. This reduces administrative burdens that come with manually managing spreadsheets and ensures all shareholders have access to the information and data that matters most to them.

  • Improved Communication: Companies can leverage shareholder portals to efficiently disseminate timely updates, company announcements, and news releases through the platform.

  • Increased Engagement: Interactive features like online voting tools, digital stock certificates, and eSignatures encourage active participation from shareholders. This helps foster a deeper connection to ownership and encourages shareholders to remain tied to the company's success.

  • Streamlined Processes: Shareholder portals automate manual tasks associated with shareholder communication and governance. Distributing tax documents, managing proxy voting, and tracking cost basis becomes effortless, saving valuable time and resources.

  • Heightened Security: Cloud-based portals provide a secure platform for storing sensitive data and documents. Additional measures like two-factor authentication and private URLs ensure that only authorized individuals can view specific information, mitigating security risks.

Best Practices for Implementing Your Shareholder Portal 

Armed with the knowledge of what shareholder portals are and the benefits they bring to private companies navigating the complexities of ownership, here’s how you can maximize the value of shareholder portals:

  • Prioritize User Experience: Ensure the platform you use offers a user-friendly and intuitive interface. That may mean one that tailors to your company brand and offers customization. Make it easy for administrators and shareholders to navigate the platform and either execute tasks efficiently or find the information they need.

  • Foster Regular Communication: Communicate regularly, not just quarterly or annually. Keep your shareholders informed with regular updates on your company's progress, even when news isn't positive. Highlight employee achievements, success stories, acquisitions, and community impact to connect on a deeper level. 

  • Promote Portal Adoption: Educate shareholders about the benefits of the portal and encourage them to actively participate. Consider offering training sessions or joint webinars with your platform provider to familiarize them with its functionalities and value.

  • Curate Compelling Content: Don't just report numbers, weave compelling narratives that showcase your company's journey, milestones, and aspirations. Tailored messaging, customized content, and targeted communication help enhance engagement and relevance.

Download your FREE 2024 Guide to Shareholder Communication

Investing in Relationships

Utilizing shareholder portals effectively can transform how private companies manage equity and communicate with their stakeholders. They are key for building strong and lasting relationships with stakeholders of all types. By implementing best practices such as maintaining a centralized information repository, providing regular updates, ensuring a user-friendly interface, and prioritizing security, companies can enhance transparency, build trust, and foster stronger relationships with their shareholders. 

Nth Round's suite of equity management solutions, including secure and user-friendly shareholder portals, empowers businesses to cultivate strong stakeholder relationships and navigate the complexities of private company ownership.