UK Edition
Blue-chip companies are facing mounting pressure to step up their engagement with shareholders after the pandemic caused scores of annual meetings to be held in private.
Fund managers, investor advisory firms and advocacy groups have warned that accountability is being risked by too many public firms holding AGMs behind closed doors.
It comes after the Financial Reporting Council – the accountancy watchdog – found that 81pc of FTSE 350 companies held closed meetings last year in response to the pandemic.
Rupert Krefting, M&G’s head of corporate finance and stewardship, expects a mixture of in-person and video conferences to become more common, but said virtual-only meetings must not become a permanent fixture post Covid.
“This is the one opportunity in the year that minority shareholders have to meet the board and ask questions face-to-face,” he added.
In a letter sent to FTSE 350 chairmen on Monday, ShareAction, the responsible investment group, demanded all AGMs not held in public must still make investor participation a top priority.
It has called for all virtual meetings to have live Q&A sessions, video conferencing where investors and board members can be seen, and voting that takes place after the board has faced questions.
"Four out of five FTSE 350 companies held their AGMs ‘behind closed doors’, with shareholders unable to participate and ask questions to the board, other than by email," the group added.
"Unlike in Spring 2020, when companies were thrust into uncertainty at high velocity with the rapid onset of Covid-19 restrictions, there is now an opportunity to learn from the experience of 2020 and time to put in place arrangements for 2021 AGMs."
Annual meetings have become a victim of Boris Johnson's efforts to tackle the virus, with companies opting to hold AGMs in private or virtually to comply with lockdown rules.
However, some boards are now pushing for video conferencing to replace in-person meetings in perpetuity.
A major investor said: "Companies shouldn’t be able edit questions and answers. It’s a problem for the retail shareholder as the institutional lot has good corporate access. It’s protecting all the punters – it’s good practice."
Andrew Ninian, the Investment Association's corporate governance director, said annual meetings offered "an important public forum for shareholders to engage directly with the company’s directors and hold them to account on their decisions".
"Investors want to see this open dialogue maintained through live Q&A, when virtual, or hybrid, AGMs replace face-to-face meetings," he said.
ShareAction has also outlined proposals for an overhaul of annual meetings, claiming many AGMs are "poorly attended, inaccessible and at times unproductive."
It wants regulators to force institutional investors to go to more meetings and publish on their websites which they have attended and why.
The group has also pressed for the work of AGMs to be split up into separate events throughout the year, with voting only taking place after a series of investor meetings.
"Much of the interaction between companies, shareholders, and stakeholders (attending as shareholders) is crowded into [one event]," according to ShareAction's The Future of The AGM report.
"This has a number of challenges. In particular, it can lead to combative interactions, and questions and answers can operate at a superficial level rather than going into the factual detail and nuance required."