Campaign group urges UK to keep virtual annual meetings temporary

LONDON (Reuters) - The use of virtual annual meetings by companies during the coronavirus epidemic must not become the norm once restrictions on people’s movements are lifted, responsible investment campaign group ShareAction said on Thursday.

Such a move could prevent investors from attending and holding companies to account ShareAction said in a letter to the head of Britain’s business ministry seen by Reuters.

“A significant proportion of retail shareholders are older people who tend to be less comfortable with using the kind of technology required to host a digital AGM,” Policy Manager Rachel Haworth said in the letter to Alok Sharma.

“In addition, physical AGMs allow retail shareholders and the board a unique and unscripted opportunity to meet and have conversations in person.”

While some companies had plans in place to allow investors to submit a question electronically, Haworth said this could also be abused.

“If attendees can only submit questions in advance and cannot ‘raise their hand’ and ask them in real time, this could allow companies to cherry-pick which questions they answer,” she said.

Earlier this week the London Stock Exchange said it would back temporarily allowing companies to hold their annual meetings electronically this year because of the pandemic.

The Chartered Governance Institute has published guidance on annual meetings during the epidemic, drawn up in conjunction with the Financial Reporting Council, which regulates auditors and corporate governance codes, and law firm Slaughter & May.

Virtual-only meetings are not viable given they may not constitute valid meetings, but the articles of some companies allow them to hold hybrid meetings, meaning a combination of physical and electronic, the guidance said.

Companies have the option of changing their articles to allow online meetings.

“The Companies Act 2006 provides flexibility to hold a virtual AGM, but a company’s own Articles of Association, rules written and agreed by the company, must allow for that as an option,” a business ministry spokesman said.

Reporting by Simon Jessop, editing by Larry King, Kirsten Donovan