Companies should ‘seize the opportunity’ presented by technology to maximize engagement at the AGM, according to new guidance from the UK’s corporate reporting watchdog.
Shareholders should be offered the same rights of participation whether they are attending in person or virtually, says the Financial Reporting Council (FRC) in a report on AGM ‘good practice’.
Companies significantly changed their approach to annual meetings over the last two and a half years as a result of restrictions caused by the Covid-19 pandemic.
In the UK, where it is legally unclear whether fully virtual AGMs are allowed, companies switched to hybrid events. But many chose to return to physical-only meetings in 2022 as social distancing rules eased.
The report notes that, for any virtual element of an AGM, companies should use technology that allows questions to be submitted in real time. It also advises companies to open the online Q&A function at the start of the meeting and ensure questions are taken ‘from all the available channels’.
When using a system to manage online questions, meeting organizers should explain how the platform works and operate it in ‘a manner consistent’ with any physical Q&A taking place, adds the FRC.
Pre-meeting Q&A
The regulator also suggests companies consider answering questions ahead of the AGM, for example through an online Q&A or webinar, to help investors make better-informed voting decisions.
The report notes that companies have differing shareholder bases – some have a small number of domestic investors, others hundreds of thousands spread around the world – so an individual approach to the AGM is required, including in the selection of technology.
‘With this new guidance, we want to encourage companies to seize the opportunity to maximize shareholder engagement by embracing new technologies,’ says Jon Thompson, CEO of the FRC, in a statement.
‘We also recognize that there are many benefits of physical meetings, allowing for more effective in-person dialogue, so companies should think carefully about which approach is right for them and their shareholders.’
The FRC received input for the report from nearly a dozen organizations including GC100, which represents general counsel and company secretaries, the Investment Association, a trade body for investment firms, and responsible investment initiative ShareAction.
