Corporate law update: 3 - 9 October

This week:

• The Investment Association publishes new guidance on virtually enabled shareholder meetings

Investment Association publishes guidance on hybrid and virtual AGMs

The Investment Association (IA) has published new guidance to publicly traded companies on holding virtually enabled AGMs. Within this concept, the IA includes both virtual-only AGMs (where there is no physical meeting) and hybrid meetings that feature a virtual-only component.

The guidance notes that, although historically institutional investors have not routinely attended AGMs, they view them as an important escalation mechanism and opportunity to engage with other shareholders.

The key points arising from the guidance are set out below.

• IA members support hybrid AGMs that combine a physical meeting with the option to participate virtually, as they maximise participation by institutional and retail investors, both in the UK and overseas, and maintain the full range of shareholder rights.
   

• However, the IA acknowledges that hybrid meetings have cost implications and might not be appropriate for all companies given the average attendance of shareholders.
   

• The IA recognises that virtual AGMs can offer benefits, but notes that its members have experienced challenges with them, including not being able to see or hear other shareholders or the directors, participate due to technical issues, ask live questions or see other questions posed.
   

• IA members have a range of views on virtual-only meetings. Some members support them only in exceptional circumstances, whilst others will consider them on a case-by-case basis.
   

• However, members generally expect an appropriate rationale for any virtual component of a meeting, with sufficient shareholder safeguards for the conduct of that component so that shareholders have the same rights as if attending a physical meeting. The guidance includes a list of safeguards that the IA expects companies to put in place.
   

• When seeking approval to amend its articles to permit virtual-only elements of AGMs, the IA expects a company to explain to its shareholders whether it intends to use that virtual-only element at the next AGM or is merely seeking flexibility for the future.
   

• In general, IA members expect companies to seek regular re-approval from their shareholders by way of an advisory vote by ordinary resolution every three years on whether the continued use of a virtual element of an AGM is appropriate.
   

• IVIS will not raise concerns where a company seeks to amend its articles if the company confirms it will meet the expectations set out in the guidance. However, it will “red-top” any company that does not provide the assurance set out in the guidance or does not seek re-approval for any virtual-only elements every three years.

Read the Investment Association’s guidance on virtually enabled shareholder meetings (opens PDF)

Read the Investment Association’s press release on its new guidance on virtually enabled meetings