Chartered Governance Institute Of southern Africa




Virtual AGMs

Virtual platforms may improve stakeholder participation, but tweaking needed to achieve meaningful engagement

Lockdown regulations brought about by the Covid-19 pandemic saw swift uptake of virtual platforms by the corporate world to ensure continued communication with key stakeholders, such as investors, employees, and the communities in which companies operate. But not
all engagements have been equal. While financial services group Old Mutual has been singled out, along with mining company Sibanye-Stillwater, for its effective engagement with shareholders through their virtual annual general meetings (AGMs), some companies have failed at this task.

The quality of virtual AGMs has varied. Financial services group Old Mutual’s AGM, in May last year was one of the best as well as being the first fully virtual AGM, says nonprofit shareholder activism and responsible investment organisation Just Share executive director Tracey Davies. “This goes to show that it is not all about learning curves and getting to grips with the technicalities. If you apply your mind to creating a good experience for your stakeholders, it is relatively easy to get right,” she adds. “Amid the pandemic, Old Mutual has tried as far as possible to keep the lines of communication open between the company and its stakeholders.

Given our large shareholder and customer base, it is important for us to be able to communicate with all stakeholders regularly and from a shareholder perspective, I would like to believe that these engagements have continued,” says Old Mutual company secretary Elsabe Kirsten, FCG. She believes that the use of electronic communication has probably improved stakeholder engagement, despite the varying strategies of different companies on engaging stakeholders, owing to it being significantly easier to gather people in a virtual room, compared with flying them in from various locations to attend physical meetings.

However, the possibility of not all stakeholders having access to a stable Internet connection was considered by the company, especially when organising its first virtual AGM last year. This prompted the company to include a disclaimer in the notice of the meeting. Noting a decline in the quality of stakeholder engagement amid the pandemic, when reflecting on the companies she is familiar with, Davies says stakeholder engagement is difficult over virtual platforms. The real issue has been the interaction with participants.

“Quality varies greatly in this regard and the manner in which boards and company secretaries have dealt with this has been very poor in some instances,” states Davies. Having a third-party read aloud a participant’s question that can only be submitted through a written Q&A section of a virtual platform is an
inadequate way of engaging with people in general, sheavers.

“stakeholder engagement is difficult over virtual platforms. – Tracey Davies”

Kirsten tells boardroom that the platforms provided as options for virtual AGMs, and used by some companies, do not all adhere to the requirements as set out in the Companies Act. “Some don’t allow for questions to be asked, aside from in written format, and it is important to allow shareholders to ask questions verbally,” she explains, highlighting reports of questions being moderated when read aloud by a third-party. “There is a certain nuance that one brings across when asking a question that is lost when it is read by another person.

It is important that the integrity of the shareholder’s question remains intact.” Davies agrees, stating that everyone hosting virtual AGMs should allow those participating to ask questions verbally on the platform. Participants should also at least be able to see how many others are present in the virtual meeting, and preferably who they are. “It is very important to enable proper engagement between shareholders and the board. But, in many instances, robust engagement is not necessarily what the board wants. When questions are read by a third-party, usually the company secretary, who has never seen them before and does not necessary respect by addressing all the questions they have asked.

While there were no specific challenges experienced when organising Old Mutual’s virtual AGM that shareholders would have noticed, Kirsten says that, as this was a new process rolled out last year, there were many aspects that could be improved on. “We have already put in place a process to improve those aspects we think could have been better executed on the backend to alleviate administrative pressure on us.” She advises that companies invest time in rehearsing for AGMs to improve the general flow of the meeting and identify who should be doing what and when. “There are instances where people have been unaware of how to operate in the realm of a virtual AGM.” Kirsten attributes the success of Old Mutual’s AGM to the platform used by the company’s service provider, The Meeting Specialist, and lots of preparation.

Davies states that virtual AGMs have expanded AGM participation and that many companies have hosted relatively successful AGMs on online platforms, with the caveat around the Q&A sessions. While virtual AGMs have improved participation, she believes, once there is an opportunity to have physical AGMs again, companies should opt for hybrid AGMs. Kirsten says hybrid meetings are the future, believing that once physical meetings are feasible again, they will be coupled with a webcast so that people can dial in from the comfort of their own home or office. “Life, as we know it, has probably changed forever and we will use technology in a smarter manner going forward.”