As we approach the Annual Meeting (AGM) season in numerous markets around the world, the recent escalation in the number of COVID-19 cases continues to be a cause for concern.
For anyone involved in the live gathering of people, of bringing hundreds or sometimes thousands of individuals together, there are some obvious concerns and risks: What if a shareholder shows flu-like symptoms, should we refuse them entry – but how would they then vote? What if we can’t reach quorum because not enough people show up to the in-person meeting? Should we check the travel history of all those who want to attend?
We felt compelled to comment, as in recent days, we at Lumi have been inundated with calls from both Issuers and Transfer Agents, from clients – and from organisations we would love to work with, and the overall sense that we see globally is of Pragmatism not Panic.
An AGM is generally a legal requirement, and even with the leniency in timescales being shown by some Exchanges, the AGM has to happen. Business needs to be conducted, even in the current circumstances. So what is the best way to do this?
Our first piece of advice is for organisations who normally conduct an in-person meeting, bringing their shareholders and Board together, is that given the huge amount of uncertainty about how events are going to unfold over the next weeks and months, the best preparation is to be in as flexible a position as possible in order to be able to adapt to changing circumstances should they arise.
Many Issuers have considered the option of a multi-site meeting, bringing smaller groups of people together in multiple locations at the same time. And whilst this is worth considering, it will also bring with it considerable cost increases, and additional planning.
In our opinion, the best course of action is to prepare to make your meeting hybrid – giving shareholders the option to join online from wherever they are in the world, or to attend the physical, in-person meeting. As a bare minimum, it gives your stakeholders choice about what they feel the best course of action is. In reality it may mean that the physical meeting still goes ahead as originally envisaged, perhaps with several shareholders attending online. It might also mean that your meeting becomes “virtually virtual” – with the majority of attendees choosing to attend remotely.
It also means however, should circumstances change significantly, that a company has the option to consider conducting an entirely virtual meeting, where the Board dials in remotely and all shareholders participate remotely. If a hybrid meeting has been prepared for then “fully virtual” can remain an option until much closer to the actual meeting date. Under more normal circumstances there may be legal issues around this. It may also create some other challenges in markets where virtual has not previously been adopted because of the way shares are held or other market structural issues. However, it could be that we are entering a period where existing norms and practices do not apply.
So if flexibility and keeping options open (for everyone involved) in a potentially rapidly changing situation is important ahead of your meeting, then it would seem to us that preparing for a hybrid annual shareholder meeting is the best way to achieve that.
Of course, from a corporate governance standpoint, we believe it is hard to make a case against the hybrid model, as it preserves the ability of the shareholder to pose questions face to face to the companies they own, while also making the meeting far more accessible to the vast majority of stakeholders who are either unable to attend physically or impacted by restrictions on travel.
A large number of organisations are already putting plans in place to run a hybrid AGM this year. There is no harm in preparing to have this option available if circumstances demand it. But it isn’t something that can be put together overnight, so if you are considering moving to a hybrid meeting, then do talk to us or your registrar sooner rather than later.
So whilst COVID-19 is an additional and immediate short term reason to make your meeting hybrid, it is really just accelerating the adoption of this technology. Shareholder engagement and representation, inclusivity and transparency are the reasons that hybrid AGM will continue to be around for long after the current threat from COVID-19 has subsided.