Traditional AGMs are widely accepted as outmoded and ineffectual. Attendance rates are declining steadily, and participation preferences are changing readily. Shareholder attendance hovers at 0.16 per cent and has fallen ten per cent over the past five years.1 Only ten per cent of the ASX-200 were able to attract 0.5 per cent of their security holders.2 Shareholder engagement and attendance is lacklustre. Boards have been slow to adapt, and the need to do so is clear.
AGMs need to be revised for the 21st century in keeping with technological trends. In an embrace of webcasting technology, virtual AGMs have taken off in markets outside Australia. While virtual-only AGMs may be commonplace in larger markets like the US, they are not yet possible under Australian Corporations law. Due to the requirement of holding physical AGMs in Australia, hybrid AGMs are starting to trend. Hybrid AGMs are a happy extension and reinvigoration of the traditional, in-person only AGM. Hybrid offers the best of both worlds.
While virtual-only AGMs have increased in prevalence in other jurisdictions along with the advance of webcasting technologies, shareholders have not yet fully embraced this format. The resistance to virtual-only AGMs is not only legislative in Australia, but also attitudinal. Attitudes are slow to change, and investors are still cautious with the concept of online AGMs. Hybrid brings technological change to those that request it while maintaining the traditional format for those that demand it.
Concerns with virtual-only AGMs
The other concerns surrounding virtual-only shareholder meetings include the questionable ability of shareholders to participate meaningfully in this format and the lack of transparency from the company in regards to the question-and-answer period. Investors could perceive that the proceedings are swayed to the company’s favour and remove the opportunity for attendees to participate. With a virtual-only format, management could filter the questions to avoid uncomfortable questions and pick only favourable ones or choose from a list of preselected items. Shareholders could be deprived of the opportunity to meet, ask questions, and express views. Their questions could be hidden from each other, and this could hinder shareholder participation and interaction. There is the perception that the company is hiding pesky shareholder questions with a virtual-only AGM and selectively answering questions.