How to run an effective AGM
James Barbour CA highlights the FRC’s guidance for listed companies on running an effective AGM.
On 21 July 2022, the Financial Reporting Council (FRC) issued guidance for listed companies on how to run an effective annual general meeting (AGM). The objective is intended to enhance effective shareholder participation when planning and conducting AGMs. In preparing the guidance, the FRC sought input from a wide range of stakeholders. It covers key aspects such as board engagement with shareholders, communication of meeting arrangements, using proxies, and voting processes.
In recognition of the changes in the medium by which many AGMs are now held, the new guidance sets out actions to assist companies in making the most of new technologies to increase shareholder engagement. It also recognises that one size does not fit all and offers flexibility to allow companies to take different approaches and use different technologies and methods depending on their respective circumstances.
This guidance is principally aimed at companies and shareholders, but is also relevant for other stakeholders. It highlights that engagement with shareholders should not just be an annual event. Although it is written with AGMs as its focus, it uses the term ‘general meetings’ (GMs) to cover all forms of shareholder meetings. The FRC expects companies to view GMs as key events within both an annual and longer-term process of engagement.
The guidance is split into four sections each containing principles followed by a list of actions that can help companies to achieve the principle. The sections and principles are as follows:
1. Before the meeting
- Information disseminated prior to the general meeting must offer clear instructions on how to attend the meeting and participate, in order to enable effective shareholder engagement.
- Whether meetings are physical, hybrid or virtual (should the legal position be clarified), shareholders should, as far as practicable, be able to engage in the business of the meeting.
2. During the meeting
- The board should provide an update at the AGM on matters raised by stakeholder groups that are considered by the board to materially affect the company’s strategy, performance, and culture.
- Companies should seek the broadest access to and participation in GMs by a diverse range of shareholders. Whether attending virtually or in person, shareholders should have the opportunity to raise questions pertinent to the meeting agenda.
- Shareholders should be able to cast their vote in real-time, or submit a voting instruction in advance via the appointment of a proxy, depending on the format of a meeting. Appropriate technology should be used by companies to ensure that shareholders have the ability to appoint proxies and send instructions to proxies prior to the meeting.
3. After the meeting
- Companies should be as transparent as possible with shareholders in relation to matters discussed and raised by shareholders at the GM.
4. Engagement throughout the year
- Effective and transparent shareholder engagement should not be limited to an annual event. Opportunities to update shareholders on company matters should be offered throughout the year, with an emphasis on ensuring all shareholders have access to similar information.