Meetings of shareholders are essential for effective corporate governance: It is through this meeting that the company’s ultimate stakeholders exercise influence on the direction of the company.
However, because of improved technological capabilities and corporations' growing interest in keeping budgetary and logistical considerations low, many are now deciding to hold virtual shareholder meetings.
Here are some considerations you'll need to keep in mind when deciding whether virtual shareholder meetings are right for your organization.
The purpose of shareholder meetings
Many companies are required by their bylaws to conduct shareholder meetings in some capacity. The most common form of shareholders meeting are referred to as Annual General Meeting or "AGM", where directors, officers, executives, and shareholders meet for purposes such as:
- Appointing the board of directors
- Agreeing to compensation and dividend payments
- Selecting auditors
- Discussing resolutions on particular matters submitted to the AGM
- Allowing shareholders to ask questions of the board and management of the company
Companies may also call for an Extraordinary General Meeting or "EGM" to consider serious or immediate actions that cannot wait until the next AGM.
For example, in some jurisdictions, shareholders need to meet to determine whether to put the company into a bankruptcy, administration or liquidation process.
In-person, hybrid, or virtual meetings
As its name implies, a virtual meeting is conducted entirely online. In the case of a hybrid meeting, companies may hold a physical meeting but also give their shareholder the option to participate online.
Each company will have different bylaws regarding the use of online voting, however, companies are increasingly allowing several voting methods to give shareholders more options.
Here are a few ways to ensure that the virtual meeting runs smoothly.
Ensure that your virtual shareholder meeting is compliant with your bylaws
Even if shareholders and company executives have bought into the necessity of virtual or hybrid meetings, company bylaws may still need an amendment to allow for virtual meetings.
Organizers of the virtual shareholder meeting need to check that any rules relevant to exchange-traded stocks or securities are complied with. For example, the US Securities & Exchange Commission (SEC) has released guidance about informing shareholders where an existing physical meeting is being turned into a virtual meeting.
Choose the right platform
You need to ensure that you have chosen the right remote platform for your virtual shareholder meeting. Matters to consider include:
- Allow for several voting methods. If a hybrid meeting, this should include allowing for in-person, application-based, and phoned interaction
- Identity verification. Anyone who can participate in the meeting needs to have their identity verified
- Secure voting mechanisms. There needs to be some method of ensuring that only those who are eligible to vote, do so. For example, encrypted codes sent to participants in advance
- Participation of other stakeholders and/or proxies. Consider whether to allow non-voting shareholders, employees of the company or other stakeholders to view/listen to the meeting. Likewise, you'll need to decide if proxy votes will be permitted.
Facilitate space for discussion and questioning
Shareholders may hold the perception that virtual meetings allow manipulation of questions. Therefore, it is essential that organizers allot time for questions during the actual meeting (not simply submitted in advance).
A fair procedure must be set up to manage questions in case they are duplicates, inappropriate, or simply too many. In a hybrid meeting where there are several methods of participation, no particular group should be disadvantaged. For example, the system should not prioritize in-person participants over remote participants.
In addition, shareholders should have a mechanism for talking to each other during the meeting (such as via private messages).
Virtual shareholder meetings are increasingly popular, but companies should make sure to carry out their remote meetings efficiently and on a platform that is secure and fully compliant with their bylaws.