There was a time when virtual AGMs were technically flawed, impersonal, untrustworthy and just not going to happen (and that time was before 2020). But those times certainly have changed and now virtual or hybrid AGMs are very real, safe, efficient, user-friendly and practically the only way for companies (in the current environment at least) to interface with their members and appropriately discharge their governance responsibilities.
Fundamentally, there has been no change in the AGM landscape. Directors and senior management dread these meetings, where their performance – and remuneration in the case of listed companies – is on display for robust discussion among the members. Most people feel awkward at these meetings, not knowing exactly what to say or do, and of course they always seem to go on for longer than necessary.
Traditionally, members have shied away from these meetings as they feel disempowered to affect change, even if they voice their concerns at the AGM. Moreover, the time commitment for all participants in preparation, attendance and travel can be quite a burden for busy executives. Given that Chairs are normally well briefed on the potential issues of concern and ready to respond to each and every question, AGMs can seem like a zero-sum game, to be endured, conducted, with results collated, before everyone moves on.
And then COVID changed everything.
The scramble has been on to implement virtual and hybrid physical/virtual AGMs which are safe for all and comply with the requirements of company constitutions and legislation, including statutes such as the Australian Corporations Act 2001. While government authorities have normally provided relief (in the form of guidance that they will “take no action” against non-compliance) from various legislative requirements to hold physical AGMs, the concerns of corporate lawyers and company secretaries has been that this “relief” does not necessarily dissolve Boards of the statutory obligations as prima facie they are in breach of these respective obligations.
On one hand, Boards are obligated to hold AGMs (and indeed want to so they can raise capital, approve transactions, and get on with the business of running their companies) and on the other hand, in many cases, we have lockdowns preventing people from physically attending their work and/or meetings like AGMs. A unique set of circumstances indeed. Let’s call it unprecedented!
With virtual AGMs “The true creator is necessity, who is the mother of invention.” And with that necessity, virtual AGMs are very real indeed. And for the better.
At this point, I’ll refer you to previous articles of The Real CFO where we have addressed navigating the AGM with planning for success and running the meeting. The key messages in these articles remain even more valid today with the onset of virtual AGMs: careful planning for success and treating people and processes with all due respect will maximise the outcomes and experience for all stakeholders in the AGM.
Virtual and hybrid AGMs are a fabulous way for all stakeholders in an organisation to connect and achieve the objectives of the meeting. The ability of people to attend these meetings is ideal for multinational organisations with directors, management and members situated in various parts of the world. So, we can expect more people attending, especially directors based overseas who in my experience would rarely attend, unless a physical Board meeting, strategy retreat had been arranged to coincide with the AGM.
Considerations when planning and hosting a virtual AGM
The costs of running these meetings and indeed the consideration of whether you have the appropriate venue are now issues of the past as the digital meeting will cater for as many people as possible. Given the complexities in respect of controlling the meeting, speakers, polling, etc, having an experienced and quality platform provider of digital meetings is a key to the success of the meeting. Most share registry services have connected with these providers to enable a seamless meeting performance. With the savings from electronic distribution of notices, annual reports and supporting materials, suggest that investing in quality digital platforms and providers to assist in running the meeting would be best practice to follow.
Rehearsal for AGMs is perhaps even more important now than before to minimise the potential for technical difficulties, to test the polling, speaking and comment functions for the meeting. Hold rehearsals preferably on the same day of the week and at the same time of day as the AGM to test whether internet speeds will be adequate for the meeting. Be aware that due to the ongoing outbreaks of COVID-19 there is high demand for meeting technology providers’ services, and it would be prudent to secure bookings early as possible. Also, consider whether the AGM process and event should be on the Risk Register of the company?
The key matters to be addressed for running virtual and hybrid meetings are:
- Oral questions through digital platforms: be clear in your notice of meeting on the extent to whether oral questions will be allowed and practically, how questions (and answers) will be conducted.
- Reasonable opportunity to participate: where technology is used to hold a meeting, the technology should give ‘the persons entitled to attend the meeting a reasonable opportunity to participate without being physically present in the same place’. This includes giving members a reasonable opportunity to exercise a right to speak, including a right to ask questions, orally rather than only in writing. Members should also have an opportunity to vote in real time, even if they had an opportunity to vote before the meeting.
- Notices of Meeting: confirm these can be sent electronically and/or consider whether a physical ‘postcard’ should be sent to members providing them with ‘notice of access’. Also, the notice should set out the place, date and time and, if the meeting is to be held in two places, the technology that will be used to facilitate the meeting. It should also specify a physical place to send proxies or enable members to provide proxy documents by electronic means.
- Establish a dedicated AGM page or hub on the company website: this area can include the details of arrangements for the meeting, links for web-streaming and can be updated to reflect changes to the situation such as changes following public health announcements. You should also consider including a short video demonstrating how to use the meeting platform and tips for boosting shareholder and member engagement online, including through the company’s website. The page could be password protected so that only those invited to the AGM will have access.
- Ensure COVID safe checks are in place at a physical/hybrid meeting: check whether COVID marshals are required if there are likely to be a significant number of attendees at the meeting. Companies may also need to have limits on the number of attendees at physical meetings to comply with local restrictions.
A whole new layer of complexities has been added to the requirements of holding AGMs following the COVID outbreaks, but you should take up the challenge of responding to these complexities by implementing best practice policies, procedures, technology and above all, planning. Having the determination to produce a high-quality AGM which provides the company with an ideal platform for demonstrating its performance and achievements, it’s future outlook, and the ability to thank its stakeholders will be the real dividends to be received by members when they experience an interactive, high quality and smooth-running AGM.