Investment Association signifies disapproval over ‘virtual AGMs’
Since August 2009, Companies in the UK have been able to hold virtual meetings as a result of the amendment of section 360A of the Companies Act 2006, as inserted by the Shareholder Rights Regulations 2009. It provides for the fully-electronic holding of meetings with no physical presence required. The ability paves the way into digitalisation as to the running of a company and provides the necessarily flexibility to a modern company in adhering to the requirements of the Companies Act 2006.
Jimmy Choo was the Main Market listed company to hold a virtual AGM in 2016, increasing investor access whilst saving investor travel costs, the cost of hiring a venue and gathering the Board together physically. It is recommended that a company’s articles of association are amended in order to facilitate the development, if a company wishes to take advantage of the method.
However, the Investment Association has recently issued a statement as to its position of these virtual AGMs. It states that Investment Association’s members will not support amendments to articles of association that allow for virtual-only AGMs. Furthermore, any amendments should confirm that a physical meeting will be held alongside an electronic meeting.
Their concerns revolve around removal of accountability for board members to shareholders because of the remoteness of the relationship. In addition, the Investment Association believes that virtual AGMs will make it harder for participants to identify other views and register agreement or disagreement, whilst also giving the impression that a board may be wanting to restrict shareholder participation or the ability to answer questions.
You can find the Investment Association’s statement at the following link: http://bit.ly/2CvHC9H