How to prepare for your 2021 (virtual) annual general meeting

For Canadian businesses, COVID-19 has accelerated adoption of and comfort with online AGMs.

For Canadian businesses, COVID-19 has accelerated adoption of and comfort with online AGMs

For the second year in a row, public companies in B.C. and across the country will need to think digital when planning their annual general meetings. Last year, in response to the COVID-19 pandemic, businesses were forced to hold their first-ever virtual AGMs with existing technologies that almost no one used, even though they’d been available in Canada for years.

The transition to virtual meetings was a success, and regardless of COVID-19 restrictions in 2021, we expect their adoption to continue. In a recent TMX Group survey of TSX- and TSXV-listed companies, more than 85 percent of respondents said they were very likely or likely to add a virtual component to their shareholder meetings.

Here are some issues and best practices to consider when planning your virtual AGM.

Virtual meeting or video/audio broadcast?

A virtual meeting platform enables a company to meet its regulatory requirement to hold an AGM, and lets shareholders attending virtually vote online on motions brought before the meeting and engage with management and board members.

The meeting can be a virtual-only AGM or a hybrid AGM, where shareholders have the option of attending the meeting in-person or virtually. This is especially important given the current situation with COVID-19. It’s also relevant during a typical meeting season because it allows for broader participation as well as a reduced carbon footprint, thanks to less travel for board members and shareholders.

Alternatively, a video or audio stream of your in-person shareholder meeting—via Zoom or other technology—allows stakeholders to listen to or watch your meeting but lacks the participatory elements of a virtual AGM.

Choosing a virtual AGM provider

We recommend contacting a virtual AGM provider early and booking your meeting well in advance. In 2020, with only two major service providers—Broadridge Financial Solutions and Lumi—and the last-minute rush to replace in-person meetings with virtual options, some companies had trouble scheduling their virtual meetings. This year, we expect more service providers to enter the market, including the TSX Trust Virtual Meetings platform.    

What do the proxy advisers say?

Larger companies and those with significant institutional ownership will need to consider the views of proxy advisers Institutional Shareholder Services (ISS) and Glass, Lewis & Co.

Although ISS continues to voice investor concerns about virtual-only meetings, it will support them as long as companies disclose the reasons for holding such a meeting.      

Both proxy advisers require robust disclosure in a company’s proxy statement, which assures that shareholders will enjoy the same rights and opportunities to participate as they would at an in-person meeting. Those rights include the ability to vote, ask questions and access support in case of technical difficulties.

Are you shareholder-centric?

As part of your ongoing shareholder engagement, consider seeking feedback about last year’s AGM and solicit suggestions about your virtual meeting in 2021. 

One of the arguments against a virtual meeting is that management could use it to avoid interaction with shareholders who may have tough questions. Issuers looking at using a virtual meeting should ensure that they’re developing and following best practices that counteract these concerns.

Transparency is critical. In your meeting materials, disclose why the meeting is virtual and give clear instructions about how shareholders, proxy holders and guests can log into the platform and access technical support. Make sure to include protocols and an agenda for the meeting, and communicate this information in advance.

Make the Q&A process clear. We recommend providing shareholders with detailed instructions about asking questions. Using an independent moderator to manage the Q&A process is a powerful way to show your shareholders and attendees that no questions will be removed or avoided. 

After the meeting, post all questions and answers on your website. If there are questions you can’t answer—because they’re irrelevant or require disclosure—simply explain why.  Some companies also publish a recording of their meeting online.

The necessity of adapting to digital meetings in 2020 has led to greater acceptance of virtual technologies. Issuers and traditional shareholders are recognizing the many benefits of virtual meetings, including cost savings, increased participation rates and environmental advantages.  There’s also a growing number of new shareholders—younger, tech-savvy retail investors—who will demand more digital communication methods.

It looks like virtual or hybrid AGMs are here to stay. Good luck with your meeting!

Lara Donaldson is chief operations officer at TSX Trust, the largest Canadian-owned transfer agent and provider of corporate trust services.

This article is for information purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and should not be relied upon for such advice.