Since August 2009, UK listed companies have been able to hold virtual shareholder meetings. However, it was not until June 2016 that a meeting was conducting using electronic means. This blog discusses the benefits of a virtual annual general meeting (AGM) and also considers why the method has not become more universally recognised in the UK.
Pros and cons of a virtual AGM
A virtual AGM will have an identical structure to a physical AGM but it will be carried out through a combination of tele-conferencing, webinar and electronic voting applications. By carrying out a virtual AGM there are instant cost advantages to the company, ie they would not need to hire a venue or arrange security. In addition to this, it is arguably easier for some shareholders in remote locations to participate in a virtual AGM than it is for them to attend in person.
However, it is clear that many companies are hesitant to conduct virtual AGMs. This could stem from a lack of confidence in the technology available. Should a virtual meeting fail, due to technology issues, an adjournment would be necessary and reconvening the meeting could be costly and result in the requirement for a physical AGM. This is potentially embarrassing for a company which was seeking to avoid a physical meeting of its shareholders in the first place.
Recently formed companies may see the benefit of utilising the technology now available in modern business, but for more established companies any shift towards virtual meetings could unsettle their entrenched shareholder base who may prefer more traditional meetings.
Many companies consider that the time and expense required to conduct a physical AGM is not justified because of very low attendance by shareholders. A virtual AGM is seen to be more accessible to the majority of shareholders which allows for increased shareholder engagement.
