Calls for Virtual-only AGMs to be Prohibited

This could be the final AGM season when virtual-only AGMs can be used in Ireland. The emergency COVID measures which enabled fully virtual AGMs are due to lapse at the end of the year, and a powerful investor group has called for their prohibition. Corporate partner, Justin McKenna discusses what this means for companies and investors in Ireland.

Virtual-only AGMs were first permitted by the Companies (Miscellaneous Provisions) (Covid-19) Act 2020. The measures have since been extended until the end of 2023.

Our review of the 2022 AGM season found that most AGMs incorporated some form of electronic communication, although most meetings still took place in person. Similar trends were seen in the UK.

ICGN statement on virtual-only AGMs

In advance of the 2023 AGM season, the International Corporate Governance Network (ICGN) has published a statement recommending against the use of fully virtual AGMs. The group warns that companies may use the virtual setting and technology to exclude unpopular views or those contrary to the board of management’s position.

Regulators and investors will likely give the ICGN statement weight. The group represents $70 trillion of assets under management. Its members include 4 of the top 5 asset management firms ranked by assets under management, as well as the Big 4 accountancy firms. ICGN’s Global Governance Principles have been cited at EU level, including in the recent Corporate Sustainability Reporting Directive, as an authoritative global framework of governance information.

The key recommendations of the ICGN are as follows:

• AGMs should be held in hybrid form so that shareholders can attend either in person or remotely
• Board members and senior management should attend in person to facilitate better interaction with questions
• Shareholder questions should be permitted, including any live, unmoderated questions, and
• The minutes of the meeting should record all questions and answers, including unmoderated questions, and should be made available to all shareholders after the meeting

The ICGN’s statement and recommendations are available in full here.

The statement warned that, if companies do not provide for properly interactive AGMs, investors will vote against the election of board members, in particular the re-election of those members responsible for company governance.

Consultation on the Companies Act 2014

The ICGN statement coincides with a review in Ireland of the measures allowing hybrid and virtual AGMs. This review forms part of a broader review of the Companies Act 2014 to be conducted by the Department of Enterprise, Trade and Employment.

The consultation was launched in April. Interested parties will be invited to give their views on whether fully virtual AGMs should be permitted.

Conclusion

Hybrid AGMs are likely here to stay. However, concerns about shareholder exclusion may mean that fully-virtual meetings will be prohibited. Interested parties should consider submitting their views on this to the Department of Enterprise, Trade and Employment consultation on the Companies Act.

For more information, contact a member of our Corporate or Corporate Governance teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice.