British companies are being urged to ensure investors are not locked out of shareholder meetings this year, after the pandemic forced the biggest ever upheaval of the annual events in 2020.
Four out of five FTSE 350 companies held their AGMs “behind closed doors” in the months after the UK locked down last March, with investors unable to participate and ask questions of the board, other than by email, according to ShareAction, the responsible investment charity.
The charity is writing to the chairs of FTSE 100 businesses to call on companies to embrace technology and make the annual events accessible to shareholders this year.
In the letter, which will be sent on Monday, Simon Rawson, ShareAction’s director of corporate engagement, urged companies to “put in place all possible measures to maximise the quality and quantity of shareholder engagement during the 2021 AGM season”.
“Unlike in Spring 2020, when companies were thrust into uncertainty at high velocity with the rapid onset of Covid-19 restrictions, there is now an opportunity to learn from the experience of 2020 and time to put in place arrangements for 2021 AGMs,” Mr Rawson wrote.
ShareAction said companies should use video conferencing for their event, allowing participants to see each other. They also want businesses to offer shareholders live, interactive, question-and-answer sessions with the full board, including non-executive directors, and that voting on resolutions takes place after discussions are held.
The letter comes as concerns grow about how annual meetings will operate. Last year, the UK government updated rules to allow companies to shift a physical meeting to an online format in response to the pandemic. The emergency legislation, however, was temporary and is due to expire within months.
Andrew Ninian, director for stewardship and corporate governance at the Investment Association, the trade body for asset managers, said it was “important that companies and their shareholders have certainty as to how AGMs can operate”.
“AGMs provide an important public forum for shareholders to engage directly with the company’s directors and hold them to account on their decisions. Central to this is the opportunity for live Q&As between shareholders and the board. Investors want to see this open dialogue maintained in the case of virtual or hybrid AGMs,” he added.
A US study last year found investors had faced big barriers at annual meetings, with a third of shareholders unable to submit questions at all at annual meetings.
ShareAction is set to release a report in the coming weeks about what future AGMs should look like, where it will propose an overhaul of the annual events in a bid to make them more relevant to investors.
Even before the pandemic, the annual shareholder meeting had come under scrutiny, with critics arguing the meetings were outdated and often attended by just a few shareholders.
Cliff Weight, a director of ShareSoc, a shareholder organisation, said the introduction of a so-called hybrid approach — with both a physical and virtual element — was “a huge step forward” during the pandemic, with many more people attending AGMs and pre-AGM webinars than in the past.