Will shareholders agree to virtual general meetings?

The Financial Times has reported that Standard Life Aberdeen was hit by an investor backlash over virtual AGMs. What does this mean for their future?

The shareholders of Standard Life Aberdeen (SLA) recently, and comprehensively, voted against a resolution to adopt new articles of association which would have allowed the company to hold virtual general meetings. SLA has said that it has no plans to abolish the traditional physical AGM, and it will engage with its institutional shareholders over their concerns.

While the initial lack of support of Institutional Shareholder Services (ISS), the proxy adviser, may have had a bearing on the result of the vote, pending the outcome of SLA’s shareholder consultation, other companies can learn a number of lessons where they are considering a similar change to their articles:

• shareholders regard AGMs as critical to board accountability, and want proper safeguards and commitments in place to ensure they have a voice at the meeting;
• before tabling the resolution, companies should engage with their shareholders. Shareholders should properly understand the proposed reform, why it is important and how a company might exercise its new right;
• hybrid meetings, which still enable attendance in person, are more likely to be palatable to investors;
• if a company will only use the new authority as (i) a last resort, or (ii) for hybrid meetings only, it must make that point clearly and potentially restrict the articles accordingly.

Shareholders should be clear on what they are being asked to approve.

Follow this link to explore previous commentary on the coronavirus and company general meetings.