Annual General Meetings in Ireland 2020 – listening to the voice of the shareholder

The critical role of the Annual General Meeting

One of the main principles in the Corporate Governance Code is that ‘for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, these parties’.

We are now well into the Annual General Meeting (‘AGM’) season, and we are seeing several different approaches to the holding of the AGMs.

Hold or postpone?

For most Irish companies, who have a December year-end, one of the first considerations is whether to hold or postpone the meeting. For those taking the postponement option, they need to be mindful of the requirement to hold the AGM within 15 months of the last AGM, so there is a summer deadline looming.

How are companies responding to how they are holding their AGMs in 2020?

We see AGM venues being changed from the original venue, such as a hotel to the registered office of the company. Attendance reflects a minimum number of shareholders needed to meet the quorum. Those in attendance (all via telephone or video link) are typically the Chair, the Company Secretary and some members of the board or senior management. Shareholders have been asked not to attend in person. Usually there are three variations of AGMs taking place:

Closed AGMs

Shareholders must vote by proxy and can submit a question in advance of the meeting. These meetings are not accessible to shareholders via webcast, therefore, shareholders have no voice during the AGM. When voting on the resolutions, the Chair will call a poll so that all shareholder votes submitted via proxy are included. This avoids resolutions being carried by a show of hands from those shareholders who are in attendance.

Comment

As the AGM is one of the few opportunities shareholders have to question the board, engage directly with management and hear the views of other shareholders, there has been some disquiet regarding “closed AGMs” from company law and governance perspective. However, if an AGM is not held, final dividends cannot be declared, directors cannot be re-elected, and share allotment authorities cannot be approved.

If a company decides to hold a “closed AGM”, it is essential that the rationale for this decision is clearly explained and that shareholders are permitted to view the AGM proceedings, and the technology should be user friendly for all.

Summary

In the midst of all the above, boards need to be mindful of their duty to engage with shareholders. We welcome where shareholders have the opportunity to put questions before the committee and where they are actively encouraged beforehand to submit their votes by proxy. This is particularly relevant where there are contentious resolutions on the Agenda of the meeting for consideration. Keeping shareholders up to date through the website is strongly advised.

In all cases, it is advisable to check the relevant provisions of the constitution of the company before any decision are made on holding or postponing and when holding, how the AGM will operate.

John Burns was Business Development Manager for CGIUKI in Ireland. John was previously Senior Manager, Corporate Secretarial Services at BDO, Dublin where he managed a large portfolio of Company Secretarial clients and an Independent Secretariat for a redress programme for a large financial institution.

He has been a member of the Irish Region Council since June 2012 having previously served as a member from 2003 to 2007.