Shareholder Meetings and Corporate Governance

Over the past decade, shareholders have become increasingly vocal on issues such as executive remuneration, environmental and social issues, and related party transactions. This has increased the importance of general shareholder meetings for shareholder engagement and voting on key corporate matters. Moreover, the growing adoption of virtual and hybrid meeting formats, partly as a result of the COVID-19 pandemic, has increased opportunities for shareholder participation and, in some cases, shareholder activism.

This peer review examines how evolving policies and practices for the preparation and conduct of general shareholder meetings of publicly traded companies may be impacting shareholder rights, engagement and equitable treatment, as set forth in the G20/OECD Principles of Corporate Governance (the G20/OECD Principles). Sub-Principle II.C.3. recommends that regardless of the format of a meeting, equal access to information and opportunities for participation of all shareholders should be ensured.

Virtual and hybrid shareholder meetings have become common, but many companies still prefer in-person meetings

A large number of jurisdictions allow virtual and hybrid meetings (45 and 49 respectively out of 52). Reforms on shareholder meeting formats and extensions of temporary frameworks first adopted during the COVID-19 pandemic have been common, and several jurisdictions are currently developing or discussing legislation, including the Netherlands and Korea. Moreover, as emergency frameworks expire, shareholders are being called to decide on whether they wish to amend companies’ articles of association to allow for remote participation. Amendments that include clear mandates and timelines for calling virtual-only meetings may reassure shareholders. Companies may also consider providing shareholders with clear explanations as to why a virtual meeting may be preferable in certain circumstances.

In 2023-24, companies made a growing use of hybrid formats for shareholder meetings, but with important differences between countries. Among the five countries reviewed in-depth for this report, all listed companies in Türkiye are required by law to hold hybrid meetings, virtual-only meetings are the most common in South Africa, while in the Netherlands, Singapore and the United Kingdom, a substantial majority of companies have returned to in-person only shareholder meetings. Virtual or hybrid meetings are particularly common in certain large countries, such as Australia, Canada and the United States. This diversity of practice suggests that the exercise of shareholder rights and active participation are closely tied to different elements, which range from a jurisdiction’s regulatory framework, common corporate practices and overall ecosystem, including its investment culture and levels of financial literacy.

Some companies are shifting to virtual-only meetings due to activism and security concerns

In some markets, a number of companies have experienced protests during general shareholder meetings, which on some occasions have been used as forums to raise broader policy issues related to the company’s activities and sustainability policies. These disruptions have led to increased security and identity verification measures and a growing use of virtual meetings. This underlines the importance for companies of having a clear framework for shareholder engagement during meetings as well as throughout the year. Despite the overall rise in virtual and hybrid meetings, guidance on how to attend, pose questions, manage digital security risks, and proceed in cases of digital disruptions remains rare and fragmented.

More and more regulators issue guidance for shareholder meeting conduct

More than half of the jurisdictions have developed specific recommendations on AGMs in their corporate governance code or ad hoc guidance, covering a variety of issues such as remote participation and voting, the question and answer process, and their disclosure. Regulators have an important role to play in promoting a coherent approach and ensuring guidance remains up to date. The benefits of having national guidance are clear from the experiences of Singapore and Türkiye. Both have some of the most detailed rules and guidance on the conduct of general shareholder meetings, which is considered positively by investors and companies.

Chairs of shareholder meetings have a key role in managing discussions and promptly dealing with disruptions. Nevertheless, regulations and company policies rarely address the issue of meeting chairing. For example, even when a law or recommendation allows shareholders to submit questions prior to meetings, there is often no time limit for submitting them nor a clear format for companies to provide answers. Singapore offers an example of how guidance on chairing meetings may increase clarity and may benefit both companies and shareholders.

Shareholder resolutions have surged, and with them greater demand for clarity on companies’ right to dismiss them

Shareholder proposals are rising globally. Proposals, usually submitted before the AGM, can cover a wide range of issues, including ESG policies (both pro- and anti-) and the governance of artificial intelligence. Companies’ discretion to accept or reject these proposals for discussion is not always clear, and in some cases may require court intervention which can be costly.

There is no common approach in how shareholders can submit new resolutions during meetings. Many jurisdictions make it almost impracticable by requiring the total agreement of the share capital to ensure all investors have adequate information and time for an informed vote. Other jurisdictions allow tabling new resolutions during meetings for shareholders with a minority share capital percentage, often restricting proposals to topics already on the agenda. Given the growing importance of shareholder proposals, these approaches for tabling new resolutions during meetings can impact investors’ rights and perspectives.

Market-driven solutions can help to reduce barriers to voting

Capital markets are increasingly global and obstacles to voting may leave a significant share of investors voiceless. Policy makers should carefully monitor obstacles to voting and support market initiatives aimed at removing barriers for retail and foreign investors. Many shareholders view trading limitations such as share blocking after record dates as a restriction on liquidity. Alternative solutions, such as shorter record date systems without restricting trading rights are already common in many markets. Pass-through voting initiatives, where asset managers enable clients to vote on shares of public companies they own on their behalf, could empower certain investors to participate more actively in corporate governance decisions. When considering the removal of barriers to voting, policy makers should consult with market participants.

A third of jurisdictions do not have or do not recommend processes for vote counting and end-to-end vote confirmations. In Türkiye, the platform used to run shareholder meetings includes such a feature and allows voting confirmations to be sent easily. In terms of vote counting, different meeting formats imply different vote counting methods, for example manual processes for in-person show-of-hands votes and electronic tools to count votes submitted electronically. Short time frames to count votes and different procedures may lead to inaccuracies, which without appropriate end-to-end confirmations can undermine investors’ trust.

Some investors are seeking greater transparency of meeting minutes

While more than three-quarters of jurisdictions require meeting minutes to be prepared and disclosed, it is much less common for jurisdictions to specify the minimum content of meeting minutes. Given that questions posed by shareholders may remain unanswered, many shareholders believe that detailed meeting minutes that capture the discussions are important. To enhance investors’ confidence and reduce company discretion, meeting recordings, webcasts and/or transcripts could be disclosed as a complement to minutes.