Don't postpone AGMs due to Covid-19, go virtual

Wednesday, May 27, 2020, was a historic day in terms of the world of virtual meetings in Kenya as WPP Scangroup, the NSE-listed communications firm, held a virtual meeting of its shareholders to approve the sale of one of its subsidiaries.

Also on the same day, Kenya Airways announced their financial results on an online stream to investors and media, while Amazon, the world’s most valuable company, also held an AGM for shareholders that was completely online.

These are unprecedented times, with companies adopting unique measures to deal with health guidelines that restrict most meetings and mass gatherings. Kenya’s Capital Markets Authority has already authorised company directors of listed firms to pay out dividends and appoint auditors, activities that would normally require the approval of shareholders at an AGM.

But Scangroup’s situation was unique as they are part of a pan-African deal initiated last year. It is potentially worth Sh5.7 billion but has a deadline of June 30 that requires the approval of 50 per cent of their shareholders voting at a meeting. They convinced a court that they could conduct a shareholder meeting virtually that complied with the government’s health rules, but which also fulfilled legal conditions to conclude the deal.

The precedent and meeting format set by Scangroup has now been adopted by other listed companies. Already Absa, Britam, KCB, Kakuzi and Liberty Kenya have all announced virtual meetings with their shareholders based on the hybrid meeting rules used by Scangroup.

Broadridge, a fintech company behind the platform that Amazon used for this year's meeting touts that virtual shareholder meetings offer companies more options of interacting with shareholders while eliminating the need to travel or organise costly physical meetings. In the US, 30 states allow companies to hold virtual-only calls, and eight only allow physical meetings, with the rest allowing a combination of both.

Certainly, companies can now stream AGMs from their office boardrooms, without having to rent out large halls at hotels or conference venues. They also do not face the expectation of having to buy lunch, umbrellas, and other goodies for hundreds of guests.

PUBLISHED GUIDELINES

The firm has also published guidelines on conducting virtual AGMs. Good practices include streaming online without technical hitches, verifying all attendees and participants, providing answers to all questions submitted by shareholders, having the meetings vote in a transparent manner and authenticating and announcing the results within a day or two after the meeting.

This year, regulators in other African countries have also allowed listed companies to conduct virtual AGMs. The Nigeria Stock Exchange had a virtual AGM last week, I&M Bank Rwanda will have one on June 22, and the Johannesburg Exchange has amended rules to allow its listed companies to have virtual meetings.

But “Just Share”, a shareholder activist firm in South Africa, has raised concerns about moderating questions, a common practice at virtual AGMs, as this may violate company laws. Typically for a virtual AGM, shareholders post questions ahead of time or type them in real-time, and then a meeting moderator relays them to the directors and managers to answer. However, the firm insists that shareholders should be uninterrupted in their interrogation of managers, and they also advise that all directors be present during the virtual meeting, companies to make video recordings available, and most importantly, allow sufficient time for questions by shareholders.

Finally, the official results of the Scangroup extra-ordinary general meeting vote were published on the company’s website and in the Daily Nation on Friday morning, following verification by PwC. They showed that over 2,200 shareholders representing 88 per cent of the shareholding had electronically voted and were 99.9 per cent in favour of the Kantar deal. The era of virtual meetings is now officially open.

Twitter: @bankelele