FRC publishes a review into AGMs held during the first half of 2020

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07 Oct, 2020

The Financial Reporting Council (FRC) has published a review which looked at the different ways in which companies held AGMs during the first half of 2020 and whether the approaches taken best served the interests of shareholders.

UK Companies have been forced to change their approach to holding physical AGMs and embrace virtual and hybrid AGMs as a result of the disruption caused by Covid-19.

As part of the review, 202 FTSE 350 AGMs held between March and August were analysed. Key findings were:

  • 80.7% of FTSE 350 sampled companies held closed meetings due to COVID-19.
  • Of the 163 companies that held closed meetings, 81.6% made arrangements to allow for shareholder Q&A with the board. This was facilitated mainly through questions emailed to the company in advance of the AGM to either be answered at the AGM or have the answers posted to the website post-AGM.
  • Of the 30 companies that held open meetings, 60% were facilitated through webinars or audiocast with live voting capabilities.
  • Of the AGMs reviewed, 30 did not enable any shareholder engagement through Q&A before or during the AGM. The review provides a number of ways that shareholder engagement might be improved and made more effective.

The review found that shareholder rights are best served by companies which provide highly effective and clear communication before, during and after the meeting, and allow full participation from those shareholders that wish to attend the AGM either in person, or virtually. The FRC recommends all efforts should be made to ensure shareholders have the ability to vote following presentations from the board, rather than before.

The review provides an annexe which offers some practical advice for companies to consider for future AGMs whether or not there are restrictions on social gatherings and social distancing.

The FRC will convene a Stakeholder Group, including government, companies and investors, to consider recommendations for legislative change and propose alternative means to achieve flexibility whilst maintaining the integrity of the AGM. The FRC has asked the government to consider, as soon as possible, what measures may need to be brought forward to ensure AGMs are able to take place either virtually or as a hybrid during 2021.

A press release and the full review are available on the FRC website.

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