Your 2021 AGM: enhance shareholder engagement using technology
Thinking about your 2021 AGM? This article provides you with ideas and solutions to increase shareholder engagement.
As we start 2021, many company secretaries will be preparing for their AGM. Thinking back to this time last year, preparations were progressing as normal until…COVID-19…lockdown…rabbit in the headlights time…how are we going to hold a legally compliant AGM when people can’t physically meet?
The resilience of companies and their company secretarial teams during that time was admirable. It involved not only changing the physical form of the AGM but consequently all of the shareholder communications and in some cases finding technology solutions to deliver the AGM at short notice. No easy task.
Our team at EQS Group was involved in many of the virtual and hybrid AGMs last year from FTSE 100 to AIM companies, delivering streaming and Q&A solutions with or without live voting. Having already provided hybrid and virtual AGM solutions during non-COVID times, our team’s experience provided welcome reassurance to our clients.
The current situation
The temporary Companies Act dispensation that was introduced via the Corporate Insolvency and Governance Act 2020 (CIGA) in June 2020 which allow companies to hold their AGMs virtually has been extended until March 2021 however the situation beyond this date remains unclear.
It’s safe to say that companies should be preparing their AGM as if certain restrictions relating to gatherings will still be in place.
While shareholders were relatively forgiving in 2020 when the majority of companies held their AGMs behind closed doors (80.7% of FTSE 350 AGMs), they are likely to be less so this year as companies have more time to plan and technology solutions have been tried and tested. While AGMs behind closed doors are of course legal, they disenfranchise retail shareholders who are unable to engage with the Board.
Bringing AGMs out of the dark ages
This is surely an opportunity to bring AGMs into the 21st Century. While the use of technology has integrated many functions of the Board and company secretarial teams (digital board portals, insider list management, entity management etc.), the AGM remains very much in the dark ages.
The FRC reflects this in its “AGMs: An Opportunity for Change” report published in October 2020. It makes for interesting reading on the importance of using technology to engage with shareholders during these times and beyond.
There are a range of solutions that companies can use to enhance shareholder engagement at the AGM:
- Live stream the AGM with Q&A (video or audio only): with this cost-effective solution companies webcast their AGM live including presentations from members of the Board (Board members can be on location or remote). Q&A is provided via a chat function in the webcast player and/or integrated conference call that shareholders can dial into. In this case, all votes need to be by proxy ahead of the Meeting.
- Hybrid/virtual with Q&A and live voting: this is the same as the previous solution except that shareholders can vote live. Via a single app/webpage, shareholders can see/hear the AGM, ask questions and vote.
There isn’t a one-size-fits-all solution as companies have different shareholder bases and budgets however the solutions available are flexible.
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A new approach?
Can we go one step further and really change the format of the AGM to better align with the purpose of the event and use technology to enhance shareholder engagement and make AGMs more inclusive? According to the FRC “All shareholders should have the ability to hear from the board before voting on resolutions, therefore it is best practice for companies to make every effort to ensure that shareholders should have the ability to vote following presentations from the board”.
Providing for live voting isn’t always feasible from a budget perspective, however the FRC have proposed a new approach: splitting the AGM into two events. The first for presentations, questions, consideration for matters in the Annual Report and the second for voting.
While departing from the traditional AGM, this definitely provides food for thought and is certainly possible given the existing digital solutions described above.
Going digital has many benefits. Shareholders save on cost and travel time, this also applies to the company, particularly for those who have geographically dispersed board members. The environment wins, an increasing concern for shareholders.
Going digital also makes the event more inclusive by allowing shareholders to attend from anywhere in the world. As stated in the FRC report, companies like Marks and Spencer (albeit with a large retail component of their shareholder base) saw a significant increase in shareholder attendance and engagement at their virtual AGM.
The fears surrounding going digital have also largely been reduced. Needing to ‘see the whites of the eyes’ of the Board has proven to be less important than initially thought. This has been helped by everyone becoming more comfortable using the likes of Zoom, Microsoft Teams, Facetime, etc. in their professional and private lives during the pandemic. The older generation have also increased their use of these platforms, an often-cited barrier to inclusiveness when introducing new technology.
Another fear around the company being able to sensor or edit questions from shareholders has proven to have some legs. This being said, best practice will no doubt emerge to ensure that shareholders and their questions are treated fairly regardless of the format of the AGM.
Finally, don’t forget your Articles of Association! The current relaxation of the Companies Act will not go on forever and if your Articles have not been adjusted to allow for the use of technology, it won’t be possible. Even if you don’t have any intention of using digital options in the near future, once the ability to meet in person returns, it’s a good idea to future-proof your Articles and your AGM.
- The 2021 AGM and reporting season: Issues to consider – Norton Rose Fulbright
- Preparing for the 2021 AGM season—key insights from 2020 and areas for focus in 2021 – White & Case
- UK AGM Season 2020 Review & Highlights – FTI Consulting
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If you are looking for a solution on how to stream your AGM or other investor events virtually we are happy to support you.