Virtual-only meetings eroding shareholder democracy, group warns

TORONTO — A group of institutional investors has voiced concerns about the rise of virtual-only shareholder meetings that they say risk eroding shareholder democracy.

In an open letter released Thursday, the coalition of 38 investors led by the B.C. General Employees’ Union called on S&P/ TSX 60 companies to publicly disclose how they will ensure shareholders’ statutory and common law rights are being upheld.

“The essence of shareholder democracy lies in the robust exchange of perspectives and the accountable exercise of shareholder rights,” Paul Finch, chief financial officer of BCGEU, said in a statement.

He said that while technology can enhance shareholder democracy, he’s concerned some issuers are using virtual meetings in ways that erode rights.

Those issues include shareholders not being able to initiate or participate in discussions, cumbersome registration procedures that discourage participation and lack of transparency on questions and whether all questions submitted have been addressed.

“As stewards of significant assets, it is our collective duty to ensure that technology serves as an enhancer, not a barrier, to shareholder democracy,” said Finch.

Signatories to the letter, which collectively represent more than $1.7 trillion in assets under management and advisory, include the California State Teachers’ Retirement System, Desjardins Global Asset Management and the Church of England Pension Board.

In calling for the commitment, the coalition pointed out that 57 per cent of S&P/TSX 60 issuers held virtual-only AGMs last year, while almost all were held in person pre-pandemic. They say the shift suggests a long-term move to virtual meetings.

“With the rise of virtual meetings, we must safeguard shareholders’ acquired rights to active participation in AGMs,” said Oumayma Ouzane, senior advisor of responsible investment at Desjardins, in a statement.

“Transparency and inclusivity in these virtual settings are essential if we are not to lose the value associated with these annual meetings.”

While there has been a shift toward virtual meetings, some companies say they’re committed to having an in-person component to their annual gatherings.

TD Bank Group, which held its AGM on Thursday, has said it has no intention of holding virtual-only meetings. Board chair Alan MacGibbon said at the meeting that he appreciates meeting shareholders in person.

“I would agree that being in person with all of you is a real asset, and valuable for us to hear your feedback,” he said.

But even companies like TD that are committed to a hybrid option are struggling with how best to navigate the virtual side of things.

At TD’s meeting, a shareholder said through the online portal that the process for asking questions via the internet was awkward, and that they did not have enough time to interject with questions when appropriate.

Chief executive Bharat Masrani said the bank would look to improve.

“We should think about how we solve that problem. Our head of technology is sitting right in front of me, and I’m sure he’s taken your comment very, very seriously and carefully.”