The GC100, the association of general counsel and company secretaries of FTSE 100 companies, has published a discussion paper on shareholder meetings, titled “Shareholder Meetings – Time for Change?”.
The paper reviews the current format of annual general meetings (AGMs). It notes the typically low attendance and participation rates at physical meetings and that very few shares are voted “in the room” at an AGM. It also notes that the temporary relaxations to the shareholder meetings requirements introduced by the Corporate Insolvency and Governance Act 2020 in light of the Covid-19 pandemic (see our earlier blog post) had a positive impact in increasing participation in meetings through the use of technology. In light of this, the paper asks whether a physical meeting is the best way to hold an AGM and considers different possible approaches to the AGM format, focusing in particular on the use of technology and enhancing shareholder and stakeholder engagement.
The paper concludes that companies should have flexibility to choose a form of shareholder meeting format that best serves their shareholder base. The GC100 encourages the government to amend the Companies Act 2006 to provide legal certainty on the validity of virtual-only shareholder meetings and says that it intends to work with other interested parties to develop a code of best practice for virtual meetings, covering issues such as access and the shareholder question and answer process. A draft of the code of best practice is appended to the paper.
The GC100 also discusses the value of further innovation in shareholder and stakeholder engagement, including the FRC encouraging companies to hold additional shareholder or stakeholder engagement sessions outside of the AGM (for example, an event held after the notice of meeting has been sent, but before the deadline for submission of proxy forms).
The paper also includes some pro forma explanatory wording that could accompany a resolution to amend articles of association to permit the company to hold virtual and/or hybrid shareholder meetings.