Investment fund Perpetual’s first virtual annual general meeting in October last year went off without a hitch, a success company secretary Sylvie Dimarco GAICD puts down to planning and preparation. “It was quite smooth, but there was a lot of preparation and planning involved to ensure that,” she says. “It starts with making sure the organisation has a robust corporate governance framework in place and that enables efficient and effective preparation for the AGM.”
The first consideration was the notice of meeting, where the company clearly articulated it was a virtual AGM, what that involved, how shareholders could join online and how they could put forward questions and comment during the meeting, and vote in real time.
The investment company sent out a similar letter a week later and ensured there was a dedicated hub on its website for relevant documents, an online guide to participating and a clearly-marked space to upload proxy forms. They also had two rehearsals — the second a “dress rehearsal” with the technology to be used in the meeting.
At the meeting itself, Dimarco notes it was important shareholders felt heard. “The chair made a decision that every question we received would be read out verbatim,” she says. Dimarco acted as moderator, reading out the questions to chair Anthony D’Aloisio AM MAICD, which also gave him time to ponder his responses. “Planning is essential — and over-communicating with your shareholders to make sure it’s clear how they’re going to vote or ask a question on the day.”
At the meeting, the only people in the room were D’Aloisio, chair of the people and remuneration committee Nancy Fox AM FAICD, CEO and MD Rob Adams, CFO Chris Green and Dimarco. The rest of the board was online. It was a far cry from the usual meeting with the entire board and executive team and hundreds of shareholders.
The way we do things now
A similar scenario was being played out at AGMs around the country as companies shifted their meetings online. In May last year, the federal government made temporary modifications to the Corporations Act 2001 to facilitate the holding of online member meetings instead of or alongside physical meetings. More than a year in, with thousands of online meetings having taken place, Australasian Investor Relations Association CEO Ian Matheson FAICD says things have gone well. “For the most part, they have gone very smoothly,” he says.
While some directors were initially nervous — as opposed to executives who were more used to online meetings for investor presentations and the like — they have grown more comfortable with the technology.
“The key thing with virtual meetings is to try to ensure the shareholder experience is as good as a physical meeting and to employ the technology that makes it so,” says Matheson. “Also to ensure the board, or more particularly, the chair, provides ample opportunity for shareholders to ask questions — that it is not in any way circumvented or cut short.”
Companies have been using a mix of methods for taking questions — some require them to be typed online before the meeting, others during the meeting, and some allow shareholders to ask live questions over the phone.
Matheson said this hasn’t always gone smoothly, particularly for live questions. He has seen several occasions where the chair called for questions, was met by silence and moved on. However, the silence was due to internet delays, not a lack of questions from shareholders. Some companies haven’t joined up their technology yet and require shareholders to log out of the meeting so they can be identified and telephone their live question, which means they can miss large parts of the meeting while on hold.
“The key thing with virtual meetings is to try to ensure the shareholder experience is as good as a physical meeting and to employ the technology that makes it so.” Ian Matheson FAICD, CEO Australasian Investor Relations Association
Investors have their say
Ironing out the kinks of asking questions and delivering live answers is essential to ensure a highly engaged shareholder AGM experience commensurate with the physical equivalent.
Fiona Balzer GAICD, policy and advocacy manager at the Australian Shareholders’ Association, suggests companies use a moderator to read out questions to the chair or introduce the questioners, which makes it feel more like an in-person meeting. They can also “pad” for the chair while they are waiting for any internet lag to catch up.
Meetings are a rare opportunity for investors to see their directors and speak and ask questions, and some virtual meetings have been quite perfunctory. “We’ve had feedback that people feel their question hasn’t been asked correctly or answered,” says Balzer. “The companies where quite often some shareholders feel ignored and that their concerns are being dismissed, feel that is even more the case in a virtual meeting, because you lose all those physical cues.”
Chairs should have all of the shareholders’ questions put to them — even if they don’t answer them — because at least the question has been asked and heard, and other shareholders have observed it being asked.
“Whereas, if you’re typing your 230-character question into a box and it’s not asked, you feel like it’s pointless,” says Balzer.
Last year’s Santos meeting went for two hours and gave shareholders a chance to speak.
Andrew Lumsden MAICD, a governance and mergers and acquisitions partner at law firm Corrs Chambers Westgarth, has attended many virtual meetings over the past 12 months and says that on the whole, chairs have been very accommodating on questions from shareholders. While he says there is a “theoretical concern” that chairs could filter questions, they are mostly asking all questions, sometimes moderating them to consolidate several questions that ask the same things. Virtual meetings have democratised the AGM and people are more likely to “turn up” than they were to physical meetings because they are less time-consuming.
Lumsden says companies need to give shareholders the feeling of live experience and not rely on recordings of addresses.
At Perpetual, the company read out all 32 questions put to the board at last year’s AGM. “A lot of the feedback we got from the shareholders who did comment was that they appreciated the fact we read out every question,” says Dimarco.
The introduction of electronic signatures for corporate documents has gone well, says Lumsden. “On the whole, people seem very comfortable with it.”
Along with virtual AGMs, the federal government last year also permitted the use of electronic signatures for corporate documents. Companies and directors can use electronic signatures for the purposes of signing documents under section 127 of the Corporations Act 2001, as well as directors’ meetings and general members’ minutes.
An electronic signature is a signature on an electronic document such as a scanned image of the signer’s ink signature, the tick of a box, or text in an email. It differs from a digital signature, which relies on the hidden data that sits under the signature.
The temporary relief measure expired in March this year. However, in early August, both houses of Parliament passed a bill to reinstate temporary measures regarding electronic execution and virtual meetings — and relief will continue until 31 March 2022.
Corrs Chambers Westgarth hopes the change will be made permanent.
“We had been one of the few jurisdictions where there was this insistence on wet ink signatures,” says Lumsden. “It was embarrassing dealing with people in other countries who go, ‘Really?’ Having a rule that two people had to sign in front of each other was really an old-world kind of provision.”
Updated joint guidance for navigating virtual AGMs, electronic signatures and electronic shareholder communications in 2021.