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.
- 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