Navigating the new world of virtual AGMs
As virtual AGMs continue to become the new normal, a new guide to holding virtual AGMs offers deeper guidance on best processes as it will be essential for corporate counsel to be up to speed in an evolving landscape.
Produced by the Governance Institute of Australia and the Australasian Investor Relations Association, with the assistance of the business law section of the Law Council of Australia, the new guide Guidance: Holding a Virtual AGM provides key tips on how to hold a virtual meeting in line with the current legislative requirements and ASIC guidelines.
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“This new guidance will provide much-needed clarity for the many organisations rapidly heading towards their AGM,” Governance Institute CEO Megan Motto said.
Ms Motto said the new guide is essential reading for all corporate lawyers and in-house legal teams.
“This new guidance on virtual meetings from Governance Institute reinforces the key requirements for an online AGM, and incorporates the updates and lessons from 2020 so far,” Ms Motto said.
“The pandemic hit as many organisations were heading into the mini-AGM season leaving companies unsure about how to legally run a meeting while adhering to social distancing requirements.
“In many instances, organisations turned to their legal counsel for advice.”
Ms Motto said amendments to the Corporations Act have been made since the outbreak of COVID-19 to allow organisations to legally hold their meetings online and to allow e-signatures.
“These are due to expire in March next year, but will ideally be made permanent. It’s a rapidly evolving landscape and lawyers need to ensure they are up to speed,” Ms Motto said.
“And as around 90 per cent of ASX’s listed entities prepare to hold their AGM by the end of November, virtual meetings remain a complex and often confusing ‘live’ issue.”
The guidance also recommends that companies holding a virtual AGM in accordance with the arrangements, should also take into close consideration ASIC guidance along with the legal guidelines set out by ASIC.
Planning the meeting
The guidance noted that there are some key practical changes to the processes and procedures of an online AGM which need to be addressed before the meeting date. One of the most important is technology.
“You will need to contact your registry and technology provider to discuss arrangements. Key to the successful execution of your AGM is a secure, robust platform that can provide a seamless experience for shareholders,” the report stated.
“Your chair will want to be involved in the decisions on what technology to use and how the meeting will be conducted.”
Ahead of the AGM, hold rehearsals to test the technology that will be used to facilitate the meeting and confirm that the chair and key stakeholders are comfortable with it. For legal teams, they can actively work together with the chair, the CEO and other board members and staff to conduct a number of test scenarios.
Notice of meeting
At the meeting the report recommended that it will need to be clearly stated in the notice that the meeting will be held online and that there will be no physical meeting.
“Most of your shareholders will not have experienced a virtual AGM before and some shareholders may be resistant to the idea of a virtual meeting,” the report stated.
“Clear and simple communication with your shareholders on how they can participate in the AGM will be important. You will need to include instructions on how to use the technology platform to send in questions and vote online.”
Other tips include providing step-by-step, visual instructions which are essential to assist members to feel comfortable using the technology. Using screenshots is helpful.
Furthermore, encouraging proxy voting for those shareholders is also recommended for those who will not attend the virtual AGM and shareholders not attending the virtual AGM should be encouraged to send in questions.
During the AGM
During the AGM, it is important that shareholders can communicate while the meeting is underway and be prepared to answer questions about the use of technology.
The report stated it is good practice for as many of the directors as possible to attend the AGM, but (other than the chair) this is not a legal requirement.
The report highlights that the length of the addresses should be as concise as possible and, for listed companies, in-house teams and counsel can ensure lodgement of any chair or CEO speeches with ASX as required by the ASX Listing Rules prior to the AGM.
For unlisted companies the report considers pre-releasing statements so that the AGM is more of an update.
It is also important that shareholders are able to communicate during the meeting and ask questions on how to use the technology and to coordinate all vital technology to enable best processes in communication during the AGM.
Questions and comments
The guide strongly recommends that someone should be appointed as a moderator as they are a key part of facilitating a virtual AGM. The moderator essentially acts as the connection between the chair and shareholders participating online.
Moderators are ideally chosen from the company’s investor relations, company secretary or legal staff as they will understand the context in which the questions are asked. A process must also be in place to maintain a record of all questions submitted online, including questions that are not answered.
There are also pros and cons of following the agenda for questions versus holding a single session for questions on all agenda items.
“The format you adopt will depend upon your company’s circumstances,” the report stated.
“Whatever format is chosen, it is recommended that the chair open questions at the beginning of the meeting to provide sufficient time for shareholders to submit their question.”