This form of AGM provided shareholders with all the aspects of a physical AGM, but in an electronic/on-line form – either via an online application (App) or via video or teleconferencing facilities. In the case of Jimmy Choo, they found that this type of meeting was better attended than their physical AGMs and some may see Hybrid/Virtual AGMs as the future of AGMs. However, there hasn’t so far been a high profile instance of any such meetings being held in the UK since. This could be as a result of the number of practical considerations and steps which companies will need to factor in before such a decision can be made. A few of these are set out below.

The benefits

There is an obvious benefit in relation to the cost savings and environmental impact made as a result of reductions in travel, venue hire and catering cost, but they should be balanced against the costs involved for setting up the teleconference, webinar and electronic voting application and all the other logistics involved in such a shift – internet connectivity etc.

A major benefit is the ability for wider stakeholder engagement in line with the new corporate governance requirement. They provide a way of allowing absent shareholders to participate, enabling greater stakeholder attendance and participation which sometimes doesn’t happen with physical meetings. Physical AGMs often have a low turnout rate – Jimmy Choo reported a much better attendance rate but as no attendance numbers were published it is difficult to determine how much better.

The practicalities

The need and cost for voting applications and provision of services offering technical expertise in Hybrid/Virtual AGMs is something companies will need to factor in and be balanced against a physical meeting, such as

  1. How will the meeting be held? Audio versus webcast.
  2. Who will host the event? Needs to be at a venue which offers good quality internet connection.
  3. What other technical considerations are needed:
    • Sound;
    • Plotting the meeting hall;
    • Lighting;
    • Back drop imaging;
    • Board attire; and
    • Removal of badges (to prevent reflections).
  4. What other general planning considerations are needed?
    • Early engagement with Registrars;
    • Chairman/Board approval;
    • AV support;
    • Location and facilities;
    • Review of the hybrid option to enhance wider stakeholder engagement; and
    • Location of the board
  5. How will questions from attendees be dealt with?

What is the future of the AGM?

When calculating the costs involved in holding Hybrid/Virtual meetings it may be that these are more suitable for larger companies rather than for smaller plcs. The one thing we are sure of though is that there is no immediate feeling that the face of AGMs will change overnight in the UK. In comparison, across the Atlantic, Broadridge, the investor services company whose software is used for virtual shareholder meetings, noted that 184 US companies held virtual AGMs in the first half of 2017, which could be explained in part to the more relaxed legislation around ‘place’ and use of electronic platforms.

However institutional investors and governance professionals have raised concerns on virtual AGMs. AGMs are an event where the entire board is asked to attend physically in order to hear questions and accusations they would rather not deal with. Holding boards accountable is a crucial part of the AGM process, especially for small investors and physical meetings therefore allow small investors to raise concerns as a collective.

If companies understand the advantages and mitigate risks in holding Virtual/Hybrid AGMs there are a number of opportunities a company can benefit from. With the increased use of technology having a positive effect on stakeholder engagement, many companies may want to consider amending their existing Articles to incorporate the possibility of hosting a Virtual/Hybrid AGM even if it does not intend to host one in the near future. The amendment to the articles may also reveal whether there is any shareholder appetite for holdings AGMs in this manner.

To discuss any of the issues raised in this article please contact Ben Harber or Olajumoke Kupoluyi in the company secretarial team.

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Ben has worked in the company secretarial arena for over 25 years and is a qualified Company Secretary, non-executive director and a contributor to the company secretarial procedures section of the Butterworths Company Law Service.

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Published: 16th March 2020
Area: Company Secretarial

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