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Virtual Annual General Meetings – A global update

We take a look at the benefits of virtual AGM and the legal situation in different countries.

Louise Cohen Louise Cohen

    In response to the spread of COVID-19 and stay-at-home policies, many countries have updated their regulations allowing listed companies greater freedom to hold virtual and hybrid AGMs. In this article we take a look at the benefits and how different countries are responding.

    What are virtual and hybrid AGMs?

    A virtual AGM sees your annual shareholders meeting taking place exclusively online without a corresponding physical meeting, and shareholders are only able to participate and vote online. A hybrid meeting is an in-person meeting with an additional option for shareholders to participate and vote online.

    What are the benefits of moving your AGM online?

    The doors to virtual / hybrid AGMs appear to be opening in many countries because the benefits – particularly but not only during times like these – are clear:

    • Offering shareholders the opportunity to participate online means they can participate from anywhere regardless of their location, making the meeting far more accessible to the vast majority of shareholders who are unable to attend physically.
    • There is less travel by shareholders and board so this consequently reduces the company’s carbon footprint and saves time and money for all.
    • Current technology permits sophisticated Q&A and messaging which ensures shareholders can effectively hold the board to account.
    • Substituting paper for digital voting means the process is more transparent, with instant results shown to participants and a full audit trail.

    Even if your jurisdiction allows it, during normal times a fully virtual AGM might not be appropriate for all companies. This will to some extent depend on the makeup of the shareholder base. If companies have high attendance at their AGM but wish to further increase access then the hybrid option could be the right choice. EQS Group runs its own AGM as a hybrid meeting, for example.

    What do issuers need to consider when moving to a virtual AGM?

    If your company is considering a move to a virtual or hybrid AGM, you will need a solution which fulfills the following requirements:

    • Full image and sound broadcast of the entire event
    • Secure authentication process
    • Digital transmission of proxies up until online voting
    • Option to send questions in text form via digital communication channels which can then be read out and answered by the board
    • Prior to the meeting: sending electronic access data to shareholders so they can access the online shareholder portal

    In markets where there hasn’t been any new legislation, like the UK (as of mid-April 2020), companies need to check that their Article of Association allow them to carry out hybrid AGMs. If this isn’t the case, this is no doubt the year to consider making this change to Articles to allow for more flexibility in the future.

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    Legal situation for AGMs: How are countries responding to the Corona crisis?

    Austria

    As a rule, general meetings of shareholders in Austria must be held physically. However in response to the COVID-19 pandemic Austrian authorities have decreed that AGMs can also be held without the physical presence of the participants. The use of technical means of communication – in particular, via video conference (visual and audio two-way communication in real time) – is envisaged to enable decision-making of comparable quality without holding a physical meeting. They have extended the deadline for holding the AGM from eight to twelve months (within the financial year of the company concerned).

    Belgium

    In the latest updated guidance from March 26, 2020 to the market with regards to COVID-19 measures, the Belgian Financial Securities and Market Authority (FSMA) has expressed lenience towards virtual AGMs. The guidance states that if listed companies opt to hold a general meeting remotely, they would have to be particularly attentive to communicating clear information about the way in which shareholders and the holders of other securities are able to exercise their rights. This suggests that fully virtual meetings are an acceptable way of holding an AGM.

    China

    Chinese listed companies are generally required to set up a physical location for their AGM but may also conduct AGMs with simultaneous use of physical and virtual activities. While no extensions for AGMs have been granted, stock exchanges are encouraging shareholders to vote online.

    France

    In the emergency law of March 23, 2020 which deals with the COVID-19 epidemic, the French Securities Supervisory Authority (AMF) has issued a statement clarifying and adapting the rules for convening and running AGMs. The statement reads: “To encourage remote voting in this health crisis context, the AMF recommends that listed issuers broadcast their general meetings on their websites and use all channels to inform shareholders”. The AMF reminds shareholders of listed companies that they do not need to be physically present to vote at general meetings, rather that remote voting is possible online via a secure voting platform (if the issuer’s Articles of Association allow this and if this voting procedure is provided for by the issuer concerned), by post using a voting form (paper or electronically, if the company Articles allow for the latter) and by proxy or blank proxy.

    Germany

    This year, as a result of the corona crisis, German companies can hold their AGMs completely online for the first time. An accompanying physical event is not necessary, at least for the time being. The new regulations are intended to simplify the implementation of an online AGM and stipulate:

    • The entire AGM (picture and sound) must be broadcast, not simply the presentations
    • Voting must be conducted and authorised digitally (or by post)
    • There must be the option of questions by electronic communication (or by prior submission of questions)
    • Convening period can be reduced from 30 to 21 days
    • AGMs must take place within the fiscal year (previously within 8 months)

    Hong Kong

    The Securities and Futures Commission (SFC) and the Stock Exchange of Hong Kong Limited (the Exchange) released additional guidance on March 16, 2020 for listed issuers with a December 31 financial year end. In the FAQ, which aims to provide direction on shareholder meetings and reporting obligations, they state “The Listing Rules do not impose a requirement on the format for general meetings.” In a guide for companies planning their AGMs, they state that issuers should consider the use of technology such as a webcast or videoconference to maximize shareholder participation. According to the guide, they should clearly explain whether or not shareholders attending the general meeting by webcast at a remote site are allowed to vote and if so, how.

    Italy

    Italian corporate law has long allowed for shareholder meetings to be attended online. Until now, however, practice has been (and bylaws of Italian companies are drafted accordingly) that, in order for the meeting to be validly held, at least two persons must be physically present in the same place (generally the Chairman and the Secretary of the meeting). In light of the circumstances surrounding COVID-19, the Council of Public Notaries of Milan decreed that the statutory clauses do not prevent the shareholders’ meeting from being held with the remote participation of all attendees (including the Chairman and the Secretary). This was announced by the Council of Public Notaries of Milan on March 11, 2020; and it aligns with the recent decree of the President of the Council of Ministries dated 8 March 2020, stating that, in order to prevent the spread of COVID-19, remote connection methods shall be adopted in all possible cases during meetings.

    Poland

    Further to the new COVID-19 law, which came into force in Poland on March 31, 2020, it is now possible to conduct AGMs using electronic means of communication, even if the Articles of Association don’t include this option. Participation in the Meeting by means of electronic communication is decided by the person convening that meeting, and in the case of a limited liability company, information on convening a meeting should include information on how to participate in the meeting, speak during it, exercise voting rights and raise objections.

    Polish law has allowed for online participation in AGMs for several years. The amendment to the Code of Commercial Companies from August 2009 states that companies listed on the Warsaw Stock Exchange have a duty to offer shareholders online participation in AGMs (unless they chose not to, in accordance with the principle of “comply or explain”). This duty includes real-time broadcast of the meeting, real-time two-way communication between the meeting and participants outside the meeting venue and exercise of voting rights in person or by proxy before or during the general meeting.

    Spain

    On March 10, 2020, the National Securities Market Commission (CNMV) provided guidance regarding the scheduling of AGMs for listed companies in view of the current public health situation. The CNMV deems it reasonable to maximize the use of remote attendance and remote voting mechanisms for shareholders, including conference call or webcast connections or any other means provided for in the Articles of Association or the general shareholders meeting rules and regulations. If these means are available and effective, a fully virtual general shareholder meeting may be feasible.

    Switzerland

    The Swiss Financial Market Supervisory Authority (FINMA) announced it would not allow extensions to convening AGMs beyond the traditional June 30 deadline but will allow for virtual meetings. The Federal Council counts both paper and electronic voting as options. Alternatively, participants could be instructed to have their vote exercised by a proxy. Such an instruction must be notified and published at least four days before the event.

    UK

    For some years in the UK it was possible for companies to hold a virtual-only AGM as per section 360A of the Companies Act 2006 inserted by the Shareholder Rights Regulations 2009. In June 2016 EQS Group supported the first virtual-only AGM for Jimmy Choo in UK. Following this, the legal community interpreted the legislation as the ‘place’ of meeting meaning a physical place. Therefore AGMs need to be in-person or hybrid (in person and virtual).

    On March 17, UK guidance was issued endorsing hybrid AGMs but reiterated that online-only meetings “may not constitute valid meetings.” Companies could consider several options including delay of the AGM if notice has not yet been issued, postponement (if the company articles permit), adjournment, or a hybrid meeting. On March 27, 2020 updated guidance on AGMs was published stating that companies should make it clear that shareholders are not allowed to attend the meeting in person and should vote by proxy. If a company has already issued its AGM notice for a physical-only meeting, but its articles allow a hybrid AGM, it can change to a hybrid AGM. Companies conducting a hybrid AGM should make shareholders aware that they can participate fully in the AGM electronically.

    US

    In most US states, companies are generally able to hold either hybrid or virtual-only meetings without seeking shareholder approval. The SEC issued guidance on March 13 providing regulatory flexibility to companies that wish to change the date or location of their shareholder meeting or switch from an in-person meeting to a virtual meeting because of COVID-19.

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    Louise Coen
    Louise Coen

    Client Director – EQS Group | As Client Director, Louise supports our UK clients in setting up successful webcasts. She is based in our London office.

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