Shareholders for Change (SfC) – a European network of institutional investors for shareholder engagementand – and Better Finance – the European Federation of Investors and Financial Services Users – have issued a call for an end to virtual-only annual general meetings (AGMs).
In a statement, the SfC said virtual-only AGMs were “detrimental” to sustainable development and all shareholders, while Better Finance added that AGMs were the “cornerstone” of shareholder democracy.
Reliable use of technology and a call for virtual-only AGMs to only be held in emergency situations, were among SfC’s requests issued in the statement late last week.
“As SfC, we recognised the necessity of virtual-only AGMs during the COVID pandemic when limitations on gatherings were in place for health and safety reasons.
“Emergency legislation enabled this approach, and we continue to acknowledge its continued relevance in the event of further ‘emergency’ situations,” the SfC said.
The SfC appeal, which was inspired by an International Corporate Governance Network (ICGN) report last year on post-COVID AGM practices and shareholder rights, went on to say that shareholders should always have the option of virtual or live participation. Adding that the preference for virtual-only AGMs also appears to be in contrast with the exercise of certain rights of shareholders in listed companies.
Consequently, virtual-only AGMs should be reserved for extreme situations, especially audio-only meetings which limit facial expression, the group added.
A Better Finance spokesperson said in a statement: “AGMs are the cornerstone of shareholder democracy and a vital component of corporate governance in listed companies. These meetings are the sole legally binding platform for shareholders – as co-owners – to voice their opinions on a company’s policies and decisions, notably on ESG matters.”
Tommy Piemonte, SfC member and head of sustainable investment research at Bank für Kirche und Caritas eG, said: “Virtual only meetings limit shareholders’ direct interaction with boards and management and the ability to view materials presented at the meeting, ask unmoderated questions and make statements from the floor.
“All of this is an obstacle to a lively culture of debate and is sometimes accompanied by restrictions on the right to speak and ask questions. For small and medium-sized institutional investors in particular, who are committed to sustainable development at companies, the annual general meeting is an opportunity to draw the attention of company management, but also shareholders, to sustainability risks that they would otherwise not recognise or not want to recognise.”
He added: “Therefore, curtailing the lively culture of debate at an AGM is detrimental to sustainable development and all shareholders.”
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