The COVID-19 pandemic introduced exceptional challenges for listed companies around the globe, and here in the UK it was no different.
The pandemic hit just when the AGM season was just getting into full swing and new rules meant that traditional physical shareholder meetings were no longer possible as restrictions were being placed on social gatherings and movement. During this period a range of guidance was published by the Financial Reporting Council (FRC) and The Chartered Governance Institute in association with the Department of Business, Energy and Industrial Strategy. Sometime later, we saw the publication of temporary legislative measures that supported the actions of listed companies in relation to their shareholder meetings, providing the legal backing for meetings taking place behind closed doors or through the adoption of technology to support remote attendance.
The experience of the 2020 season has shown that companies have taken different approaches and many, often due to limited timeframes, opted to adhere to the minimal requirements to ensure the meetings could go ahead. The prevalence of meetings taking place with only a minimum quorum in attendance and the criticism this has sparked in some circles has prompted the FRC to consider the actions of the season. They have looked into the role of technology in ensuring good governance practice and wider stakeholder engagement.
The FRC’s review of the 2020 season ‘AGMs: An Opportunity for Change’
provides some considered findings based on extensive analysis of the meetings held by FTSE 350 companies, interviews and discussions with companies, shareholder groups, registrars, and service providers. It also provides comprehensive best practice guidance based on learnings from this AGM season, with a view to helping companies as they plan and conduct their shareholder meetings in 2021.
MethodologyThe FRC looked at 202 AGMs held between March and August and categorised them into three groups:
1. ‘Closed’ meetings
- Shareholders were not offered the opportunity to ask questions prior to or during the meeting.
- Shareholder requested to vote in advance via proxy.
- Shareholders invited to submit questions in advance with some or all answers placed on the company’s website.
2. Meetings with some shareholder engagement
- Board members available on the day of the meeting to present information via audio or webcast.
- Shareholders were able to submit questions prior to the AGM, and a selection answered during the AGM with others answered on the website.
- Shareholders requested to vote in advance via proxy.
3. Meetings with more shareholder engagement
- Shareholders were able to engage virtually with the board on the day of the AGM.
- Included options to submit questions prior to and during the AGM.
- Shareholders were able to vote during the AGM.
For their analysis, the FRC looked at the notices of meeting, and updates to AGMs published on the Practical Law database, together with a sample of 202 published notices for meeting held from 10 March – 30 June.
These meetings were then categorised as either ‘closed’ or ‘open’.