AGM’s – Let’s Get Digital!
If you are required to hold an Annual General Meeting (AGM), either by law or your governing documents, you will be well aware of the challenges that arranging this event can present. Many organisations we come across, need to hold an AGM but are finding it increasingly difficult to justify the costs of a physical meeting with often very low turnout of attendees.
Held out as a democratic event, giving members the opportunity for their voices to be heard, they are often so poorly attended that they do not end up being democratic at all, with the same individuals having their say, which can sometimes be at odds with the wider ownership.
You can argue that everyone is given the chance to attend an AGM and so if they choose not to attend or issue a proxy, it is up to them, but in a world where people are geographically more spread out and with increasingly busy lives, it is often simply not possible to attend a physical AGM which may be hundreds of miles away (or more). Indeed, organisations have been criticised for holding meetings in venues at times and in locations which are widely inaccessible.
Holding an AGM can be a brilliant way of ensuring accountability and openness, giving the chance for shareholders or members to have their say, so if you’re going to hold one (or have to hold one), it makes sense to ensure that you have a fair proportion of members involved. An increase in attendance, usually means an increase in participation with more people having their say.
In an increasing digitised world, virtual AGMs are becoming more popular as a way of seeking greater ‘attendance’ with some AGM’s reporting a more than 300% increase. However, there are also some downsides, with some arguing that the use of virtual AGMs can actually be less democratic.
We look at both the benefits and challenges that virtual AGMs bring.
How does a virtual AGM work?
A virtual AGM allows shareholders or members to attend the meeting from the comfort of their own home/office, technically from anywhere in the world, meaning that they do not need to physically attend the meeting to take part.
In order to do this, the organisation running the AGM needs to use appropriate technology, to allow the member to actively participate in the meeting. Crucially, the technology must enable the individual to both speak and vote at the meeting.
For poorly attended AGMs, especially those in the not-for profit sectors, the benefits can be huge:
• Reduced costs (venue, catering, travel, accommodation)
• Reduced time commitment for directors and staff
• More flexibility on when the meeting can be held
• Ability for shareholders who cannot travel to attend
• As a result of increased participation – better quality debate; increased accountability and openness
• Less physical accessibility concerns
• Reduced carbon footprint due to less travel required and less waste created/energy used
• Increased control and management of meeting
• Better visibility of who is attending
• No physical issues caused by unexpected numbers
• Near-immediate results from votes
There are many benefits to using technology to facilitate shareholder engagement , however such virtual AGM’s may not be right for all organisations. There are some challenges to consider:
• Costs – these may not always be reduced. Facilitating the roll out and support of new technology across hundreds of thousands of shareholders/members across different countries/timezones could actually be higher than the controlled and limited costs of one physical meeting which can be effectively limited in size
• Technological failure leading to reputational damage, cost and need for adjournments
• Tech-phobia of members not wishing to/able to engage with the technology needed, meaning that access is actually reduced
• Increased ability of the board or management being able to cherry pick questions/ignore those it does not wish to consider, which is harder to do at a physical meeting
• Shareholders not being able to act collectively
• Shareholders not being able to use the meeting to stage a protest (although arguably this is also a benefit…!)
• Loss of face to face engagement with stakeholders
Avoiding the pitfalls
Whatever type of AGM you choose, planning is key. Here are some things to consider when opting for a virtual AGM:
• Ensure that governing documents don’t expressly or indirectly prohibit virtual AGMS
• Get your members onside beforehand – you may find that introducing the idea of a virtual AGM over time, highlighting the benefits, may have better results than announcing the intention two months before the AGM is due….
• Confidence in the tech used – you should be confident in the technology to be used, undertake appropriate testing and risk management beforehand and ensure safeguards are in place
• Ensure that the technology effectively and accurately counts votes
• Ensure that the usual requirements on quorum, notice and delivery/display of documents are abided by
Making the appropriate choice
Virtual AGMs might not be right for everyone. Th key is choosing the right type of AGM for your organisation, weighing up the pros and cons as they apply to your particular organisation, members and circumstances.
Many organisations are also opting for a hybrid AGM where attendance can be both in person or virtually, potentially offering the ‘best of both worlds’ and delivering optimum shareholder engagement by allowing each one to choose which way they want to ‘attend’ the AGM.
Help where you need it
Whichever type of AGM you want to run, Bridgehouse is here to help.
Bridgehouse Company Secretaries has vast experience in working with its clients to arrange and run AGMs of all shapes and sizes, both physical and virtual. Our AGM services include: venue management, drafting all required paperwork, shareholder communications, management of technology for virtual meetings, arranging voting and ballots at physical meetings and appropriate recording of the meeting (minutes).
For more information and to get in touch click here.