Pension funds-backed Ethos Foundation is opposing the proposal of pharmaceutical company Novartis to include in the possibility of organising fully virtual annual general meetings (AGMs) its articles of association, it said yesterday.
Virtual-only AGMs represent a “deterioration of shareholder rights”, with pension funds most of the time having a chance to confront the board of directors of companies, asking questions directly, mainly during in-person AGMs, it said.
Ethos also worries that other listed companies in Switzerland will follow the example of Novartis, submitting a request to change their statutes to their shareholders this year to organize virtual-only AGMs.
The foundation is in favour instead of “hybrid” AGMs, both with in-person presence and live broadcast on the company’s website to vote and speak remotely, it said.
It supports the virtual format without physical presence only in cases of events such as a pandemic or natural disaster, or other catastrophe, according to its voting guidelines.
This would give shareholders a choice to exercise their voting rights, and organising hybrid AGM would not require a review of companies’ statutes, it added.
The decision taken by Novartis to potentially organise virtual-only AGMs is in line with the latest version of the Swiss Code of Obligations that entered into force on 1 January.
The revised code allows companies to hold AGMs without shareholders’ physical presence, if it is stated in the companies’ articles of association. The shareholders will have to decide whether they are in favour or not.
Companies, however, will have to give shareholders the possibility to vote and speak virtually during an AGM, a break with the practice in place during the COVID-19 pandemic. Companies based in Switzerland have yet to test such a system.
Novartis will kick off this year’s AGM season this year with its own on 7 March.
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