How difficult can it be?
Sure, it’s a bit more complicated than having a Teams meeting with your work colleagues or a Zoom chat with your mates, but we’re dealing here with multibillion-rand companies involved in some highly complex businesses, employing tens of thousands of people.
So why do so many of them struggle to hold a passably decent AGM?
Like so much of our lives, Covid complicated it all. Before the pandemic upended things, AGMs were straightforward vanilla affairs on a scale from Caxton, being the most basic, to Capitec, which enticed hundreds of shareholders with opportunities to engage with the directors and enjoy great snacks.
Now, things are all over the place. Though not everything has changed. Caxton is still there holding up the basic end with its quaint in-person-only AGM offering.
The virtual turn
Within months of Covid locking us all down in March 2020, the corporate world had worked out ways of holding virtual AGMs. Some companies, Old Mutual for instance, did it well from the start; others, such as PSG, not so well.
Five years on and you’d really think everyone had worked it out by now. Not so. Some of our wealthiest and best-resourced companies host meetings that are, frankly, an embarrassment.
Well done to the many who have improved. Spar showed it is possible to hold a first-rate meeting despite facing all manner of operational and governance challenges.
But a worrying number of companies seem to get to the AGM time of the year and decide they really couldn’t be bothered with shareholders any more. Perhaps they’d had one too many investor presentations with their large institutional shareholders and thought that was really as much as they should have to do.
Whatever the reason, we here at Currency would urge you to try a little harder. We’d like to assure you your efforts will be rewarded in some shareholder heaven, but they probably won’t be. You should do it because it’s the right thing.
That said, the AGM presents an excellent marketing opportunity; one that doesn’t involve handing over wads of dosh to a PR company. Of course, there’s always the possibility of them going embarrassingly pear-shaped. Remember Naspers’s AGMs in 2016 and 2017? Those were the years when shareholder activist Theo Botha pitched up looking for documents he was entitled to in terms of the company’s memorandum of incorporation. Naspers chair Koos Bekker and the company secretary refused. In both years there was a stand-off. In 2016 Bekker threatened to have Botha thrown out as he continued to demand to know why he could not get the documents. In 2017, a visibly flustered Bekker abruptly shut down the question session.
Surprisingly, it took Bekker two years to catch on, but catch on he did, and 2018 was the sort of AGM you’d expect from a fabulously wealthy company with tentacles all over the world.
What a shame Covid brought those performances to an end. Now, Naspers’s AGM is a considerably watered down, virtual-only version of its sparkling 2018 and 2019 affairs. The Prosus in-person meeting in Amsterdam isn’t of much use to South Africa-bound shareholders.
And any shareholders who attended FirstRand’s AGM last December might have left feeling a little worried about who’s directing this once mighty financial ship.
Patchy adherence
So, what are the essentials for a top-notch AGM or even just a basic common garden affair? Unsurprisingly most of them are contained in sections 62 (notice of meetings) and 63 (conduct of meetings) of the Companies Act. Equally unsurprisingly, it turns out these are a bit like the rules of the road in that adherence is a bit patchy.
Take, for example, section 63(2)(b), which deals with the essence of the modern AGM and provides for electronic meetings “as long as the electronic communication employed ordinarily enables all persons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate reasonably effectively in the meeting”.
Well, as shareholder activist Just Share, which keeps a remarkably detailed account of many of the large AGMs, will tell you, this section, a bit like the speed rules, is frequently ignored.
So frequently ignored that the Companies and Intellectual Property Commission (CIPC), which is responsible for overseeing the Companies Act, felt it had to send out a reminder. Late last year it issued guidelines for AGMs conducted electronically. It reminded everyone of the law and stated:
“A company that chooses to conduct an AGM electronically should allow for:
- Matters to be raised for consideration as an item of business of the AGM.
- A combination of written, verbal, telephonic and video questions to ensure reasonably effective participation in the AGM.
- An agenda to be provided at the start of the AGM, thus allowing shareholders to know when they will be called upon to ask questions.
- Shareholders to be able to see and know who else is attending the AGM online and to be able to interact with each other without an intermediary.
- All participating board and executive members to be visible in real time for the entire AGM, regardless of who is speaking.”
It’s difficult to imagine this intervention wasn’t prompted by Just Share, which has assumed the role of speed cop and regularly reports on poorly run meetings.
The CIPC guidelines are extremely useful, so it’s disappointing they’ve already been breached, and surprising the commission has been reluctant to challenge individual companies on breaches.
The list
But there’s lots more to a useful, reputation-enhancing AGM than just following the guidelines. Here are some of Currency’s suggestions:
- It starts with the integrated annual report. Over the past decade or more, that document has become increasingly dense and inaccessible as companies have opted to adhere to the growing mountain of regulations and recommendations by inundating shareholders with information; some of it is useful, much isn’t and loads of it is repeated. But that’s a story for another day. In the context of the AGM the important issue is to get the integrated annual report out as quickly as possible. The minimum requirement is 15 business days before the AGM but given how wordy they’ve become, companies would be better advised to allow as much time as possible for shareholders to interrogate the information in the report.
- Hold a hybrid meeting so that shareholders who want to attend in person can. A digital-only meeting smacks of a disdain for shareholders and the desire to limit the quality of engagement, generally for some nefarious reason. Sadly, there is no onus on shareholders to attend AGMs; there should be.
- Provide easy access for shareholders and guests.
- All questions should be asked and answered before voting on resolutions. The content of the answers could influence voting.
- A message box should be used for written questions that can be seen by all participants and voice integration facilities should be used for verbal questions. A dial-in facility for verbal questions is rarely satisfactory.
- Shareholders should be allowed the opportunity to ask follow-up questions immediately.
- After the AGM, post a link to a recording as soon as possible, and provide the detailed minutes of the meeting. The reality is that many of the participants will be recording the meeting and these days AI provides near-instantaneous transcriptions, so there’s really no point in companies delaying the release of the formal version.
It’s all really quite straightforward. Roll on 2025.
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