Addressing virtual AGMS shortcomings
OWING to rapid developments of technology, general meetings of companies can be facilitated virtually, thus representing a viable alternative to pure physical meetings following the Covid-19 outbreak.
However, the technical glitch, which resulted in the postponement of a major bank’s virtual annual general meeting (AGM) this week illustrates that while technology serves as a powerful enabler, one should be mindful of potential “technology gremlins”.
Technology glitches may take many forms.
For example, some listed companies have experienced outright outages, log-in interruption, disruption during presentations and voting of resolutions, time lag of several hours between extracting remote participation voting results and scrutineering as well as announcing the results.
While companies cannot be completely insulated from glitches, they can certainly pre-empt potential scenarios and be prepared to deal with untoward instances, say experts.
For example, before holding a virtual general meeting, a company would want to do a “dry run” of the meeting with its technology platform provider.
There should also be contingency plans to deal with a technological failure, such as a power or network outage.
Besides this, there is the concern that shareholder activism may take a beating during the conduct of virtual AGMS.
A study by a law school on corporate governance last year showed that while virtual-meeting format has the potential to increase shareholders’ voice, since participation is less costly, frequently, less time is dedicated to addressing shareholders’ concerns.
It is often suggested that not having visibly present shareholders, and perhaps not observing shareholders’ responses throughout the meeting, ultimately leads to the communication of less information by the company to its shareholders.
Another issue that has cropped up is whether questions raised by shareholders are being cherry-picked.
A shareholder meeting is the platform where investors meet and interact with management, and to raise concerns regarding the company.
One key point in the conduct of the virtual AGM is the need to not just appear transparent but to be seen to be transparent, say experts.
This can be addressed by having an independent moderator to moderate the question and answer session.
It would help assuage concerns of shareholders’ questions being side-lined or ignored.
Their presence can also contribute to an efficient conduct of general meetings by streamlining repetitive questions and prioritising questions that are related to business performance, governance and risk management.
An alternative to virtual AGMS is a hybrid one where there is a a mix of smaller in-room attendees, plus have ability to enable virtual access.
A hybrid structure, say some, would provide greater transparency when it comes to submitting questions to a company’s management team.
Across the causeway this week, Genting Singapore Ltd held its virtual AGM where shareholders were allowed to ask questions “live” – a right step towards injecting transparency and dynamism in general meetings.