31 August 2022
The Financial Reporting Council (FRC) has published new guidance for listed companies when planning and conducting shareholder meetings, focussing on Annual General Meetings (AGMs). The guidance takes the form of seven principles and, whilst not mandatory, is offered by the FRC as a summary of good practice which is intended to enhance effective shareholder participation.
Before the meeting
- Information disseminated prior to a general meeting (GM) must offer clear instruction on how to attend and participate. In addition to the legal requirement to send a notice of meeting, the guidance suggests that appropriate means of communication should be identified and used to update all shareholders about arrangements (and any changes to those arrangements) as soon as possible – for example, by way of a dedicated area on the company website.
- 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. This goes beyond ensuring that shareholders understand how to access the meeting. Shareholders should know how and when to submit questions, with a clear timeframe explaining when and where questions should be sent and how they will be answered. Whether attending virtually or in person, shareholders should have the opportunity to raise questions pertinent to the meeting agenda.
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. Importantly, the board should regard the AGM as an opportunity to explain how such matters have been taken into account or influenced its decision-making (perhaps in order to offer additional context to those matters reported in the statement in the annual report in respect of matters set out in s.172 of the Companies Act 2006).
- Companies should seek the broadest access to and participation in GMs by a diverse range of shareholders. In relation to any virtual element of a GM, companies should provide online functionality for real-time questions to be submitted during the meeting orally or in writing/electronically. Where questions are invited in advance of a GM, it is common for companies to group similar questions to avoid repetition; while the guidance takes no issue with that approach, it is suggested that companies should consider explaining any methods of grouping questions to increase transparency.
- 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 to ensure shareholders are able to appoint proxies and send instructions to them prior to the meeting.
After the meetingCompanies should be as transparent as possible with shareholders in relation to matters discussed and raised by shareholders at the GM. This may include publishing written answers to questions submitted. Where 20 per cent or more of votes have been cast against a resolution, the company should explain when announcing voting results what actions it intends to take as required under Provision 4 of the UK Corporate Governance Code.
Engagement throughout the year
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 transparency and ensuring shareholders have access to similar information. One way of doing this is to use the company’s website more effectively as a repository for recordings of, or slides or summaries from, investor events (including a GM). Companies should consider making presentations delivered at non-confidential stakeholder similarly available.
To find out more, or do discuss how RSM can support you, please get in touch with Tom Proverbs-Garbett, or your usual RSM contact.