A body representing investors around the world has “cautioned” against the rise in holding “virtual-only” AGMs, following regulatory change in many jurisdictions.
The International Corporate Governance Network (ICGN) says virtual-only annual meetings undermine shareholder rights and diminish board accountability.
The organisation’s chief executive, Kerrie Waring, called on companies to stage “hybrid” AGMs and on regulators to “discourage” legal changes that would allow virtual-only shareholder gatherings.
“Companies must commit to provide for hybrid AGMs to allow global investors to have the option of virtual or live participation,” she said. “We also encourage regulators to adequately consult with shareholders and stakeholders in the event that any changes to regulation or legislation regarding the format of AGMs, particularly matters impacting shareholder rights, are being considered.”
Covid surge
Though discussion of changing the format of AGMs began some years ago, it was the Covid pandemic that saw the rise of meetings online, with many countries changing their laws to ensure this could happen. Many companies used the internet throughout 2021, but the following year saw a resurgence of in-person AGMs.
ICGN says that virtual-only AGMs should be used only “in extremis” or in an “emergency”.
A statement from ICGN says: “We are no longer in an emergency situation and it is not necessary for companies to restrict AGMs to a virtual-only format. A hybrid approach is optimal, allowing for both in-person and virtual participation by shareholders.”
The first virtual-only AGM is widely reported as being in 2016 and was staged by Jimmy Choo, the fashion brand. Since then there has been much debate about online shareholder events.
Sir Archie Norman, chair of department store chain M&S, recently called on government to reduce the administrative work needed to stage a digital AGM. This, he said, would allow shareholders from around the world to attend.
Even so, shareholders complained about virtual-only options as early as 2017. The Investment Association, another club for investment managers, issued a “position statement”: “Virtual AGMs are not in the best interests of all shareholders,” it declared, “and should not be used by invested companies as their use could be detrimental to board accountability. IA members are unlikely to be supportive of amendments to articles of association which allow for virtual-only AGMs.”