Should we kill the AGM?

The Corporations and Markets Advisory Committee (CAMAC) has just released a discussion paper (PDF), which introduces concepts that could result in the end of the Annual General Meeting (AGM) as we know it.

End of the Road for AGMs?

Is it the end of the road for AGMs?

The Committee was charged with researching:

  • The relationship between company boards and institutional and retail shareholders;
  • Whether annual reports are doing their job of providing information about the state of companies to shareholders; and
  • Whether the format of the AGM should change.

The current form of the AGM stems from a time when the only way for shareholders to discuss the company they had invested in was to hold a physical meeting. Yet, so much has changed since the first meetings were held.  

CAMAC’s report noted that share owners were increasingly from overseas, making a physical AGM a difficult prospect for many investors. It also pointed to a trend for shareholders to hold shares for a much shorter time then had been the case previously, such that boards find it ever more difficult to communicate in person with all its shareholders effectively.

The AGM is now far from the only opportunity shareholders have to interact with the company – institutional investors often prefer to raise issues directly with the company as they arise. There are also other ways to interact, for example corporate briefings. Given these opportunities and the fact that votes by institutional shareholders are often cast before the meeting, attendance at the actual AGM has been low and is generally limited to retail investors, CAMAC noted.

Almost everything about conducting an AGM was put under the microscope by the committee, but the main issue tackled was on a larger scale; given the poor attendance and technology advances, should we hold AGMs at all? Or should the communication be conducted in a different way?

CAMAC proposed four main options for a changed AGM.

  1. Limit the AGM to the discussion and voting on resolutions.
  2. Take voting away from the AGM, enabling it to be completed before and after the meeting
  3. Enable the companies more flexibility in the design of their own AGMs
  4. Make AGMs optional

There was also the possibility of holding an unchanged AGM both in a physical location and online via webcast, an online-only meeting where the chair and company representatives present live, or as a virtual meeting that was pre-recorded. 

CAMAC has invited submissions on all the issues raised in the discussion paper by 21 December, but noted that the paper isn’t relevant for not-for-profit companies (currently the subject of an ongoing legislative review process) and is not considering the two strikes rule or no vacancy provisions for board appointments.

Those who would like to peruse the full 90-page report can access it here (PDF).

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