Following the Prime Minister’s statement on 22nd February, there’s still some time left on the clock for new CIGA regulations, as the UK braces for a staggered re-opening over spring. Whilst there are legal provisions in place to allow for closed-doors meetings to continue as a constitutionally acceptable alternative in the age of coronavirus, the impact of such meetings on shareholder engagement and democratic rigour may far negate the benefits they offer in terms of business continuity.
With this in mind, how should companies approach the AGM in 2021? Cautiously? Perhaps. Wiser however, is to approach the season armed with knowledge, good governance and confidence in your modes of practice. Whether you ultimately plump for a hybrid meeting that incorporates a small, closed physical meeting alongside a virtual element, there are things your organization can do to make your AGM work for both your company and your shareholders.
The ICSA recommends a flexible approach to the AGM in 2021 with four key considerations:
- Closed meetings will only be permissible after 30th March if legislation and guidelines at the time preclude gatherings of more than a very limited number.
- Social distancing must be factored into venue planning and the logistical elements of the meeting.
- Companies may impose limits to shareholder attendance or strongly recommend that shareholders do not attend if coronavirus restrictions exceed the 30th March deadline.
- Companies can organise a hybrid meeting, even if their articles do not expressly enable this.
Whilst the picture of the 2021 business landscape remains complex, businesses must be alert and receptive to changes in legislation; with CIGA regulations likely coming to an end on 30th March, closed meetings will no longer be an acceptable measure for organizations. With only a small scale in-person meetings available, companies should consider offering shareholders as much electronic engagement as possible, both before and after the meeting, as well as during the meeting either as a virtual hybrid participant or an observer. To fulfil your duties under your Articles of Association, and ensure your organization can form quorum, digital attendance is a fantastic alternative to costly venues that can safely accommodate social distancing.
How can your organization more easily plan for a hybrid meeting?
In your notice of meeting, it’s important to publicize your intention to host a meeting online, so that your global shareholder base has a chance of joining the AGM. Once CIGA restrictions ease, closed-meetings will not be constitutionally acceptable. As a result, it’s important your organization provides an opportunity for meaningful shareholder engagement via a robust platform, capable of managing an effective Q&A. Hosting a hybrid meeting also helps to fulfil your obligations under SRD II, and provide visibility and channels of influence for shareholders.
What are the requirements companies must fulfil to ensure a valid hybrid general meeting?
According to the latest guidance from the ICSA, participants at a hybrid meeting— for the meeting to be considered legally hybrid— must have the ability to participate in the meeting on an equivalent as those in the room. All those participating (whether physically or electronically) must be able to vote in real time at the meeting, hear the proceedings of the meeting, speak and be heard at the meeting.
It’s important that companies consider provisions in their articles, if any, with respect to how this is expressed in further detail. In each case, shareholders should be treated fairly across the physical and electronic formats. For example, the Chair of the meeting should not start the business of the meeting until they consider that all the elements under the control of the company have been made available to both virtual and physical attendees. If the above cannot be achieved, a hybrid meeting should not be held as this could impugn the validity of the meeting. Companies in this situation may still use an electronic platform to allow shareholders to follow proceedings and ask questions in real time.
How should questions and answers be conducted at a hybrid general meeting?
It’s vital that companies make the distinction between their requirement to make sure shareholders are heard and seen, and a shareholder’s ability to ask a question through a chat function. As emphasised by the ICSA, “In certain cases, the technology on offer may only permit virtual participants to ask questions through a chat function. This does not equate with the ability to ‘speak’ and ‘be heard’ at a meeting and therefore in the absence specific provisions in the articles which allow participation by communication in a different way (including a definition as to how persons participating can electronically ‘speak’), those attending electronically are not participants in the meeting.”
It’s essential therefore, that you select a platform that is equipped to integrate telephony into the form of the meeting, to ensure shareholder voice is heard, and guarantee the legitimacy of your meeting. Globally, there are very few meeting providers who have experience of offering telephony through their platform. Lumi is one of the few players who have almost two decades of experience offering telephony, helping organizations ensure business continuity and fulfil their obligations under SRD II.
When it comes to ensuring best practice in the age of coronavirus, one size almost certainly does not fit all. Although emergency measures persist until 30th March, closed doors meetings are an inadequate alternative to the AGM, and are, in normal times, exceptionally poor practice. In addition, whilst it’s essential that the legal requirement is met, as many practitioners know, good practice exceeds the legal requirement. At Lumi, we know that good practice will always lean towards a hybrid approach, thanks to the formats ability to marry constitutional requirements with improved shareholder engagement.
To learn more about hybrid meetings with Lumi, speak to one of our experts today.