Physical AGMs remain on backburner

National Sacco during their heated AGM. FILE PHOTO | SIMON CIURI | NMG

Companies are clinging on to virtual annual general meetings (AGMs) amid a push from investors for a return of physical gatherings following the lifting of the ban on large indoor gatherings.

Many firms, especially those listed at the Nairobi Securities Exchange (NSE), have continued with the virtual AGM— a practice that started in mid-2020 when Kenya was hit with the Covid-19 pandemic.

The pandemic saw firms seek investors’ approval to change internal rules to allow for either physical or virtual meetings.

But firms have opted for the virtual option even as a section of shareholders push for a return to physical gatherings.

All the NSE firms which have held or are planning to hold AGMs such as KCB, Equity, Co-operative Bank of Kenya, Sasini, Sameer, TransCentury, Britam, TPS Eastern Africa and Crown Paints Kenya have all gone the electronic way.

Most key decisions such as replacing a director or chief executive, approving finances or extending benefits to employees can now just take a virtual formal meeting of either board members or shareholders.

The move has saved companies millions of shillings that they have been spending on hotel bookings, travel, lunch, printing voluminous copies of annual reports and buying goodies such as branded umbrellas to gift shareholders.

Read: Virtual AGMs save firms millions

But shareholders are refusing to accept the realities of the new world where they have to log on to digital platforms to be updated about their firms and ask and receive answers from people seated far away from them.

“When are you intending to hold physical meetings for AGM, special and extraordinary meetings,” one shareholder posed to Stanbic Bank which held its virtual AGM last month.

Stanbic responded that virtual meetings have become the “new norm” since it comes with advantages such as convenience and inclusivity, especially for investors outside Nairobi or Kenya.

“That said, we do not want to lose contact with you. As such, we will be disbursing 2GB data bundles to each of the shareholders logged into the AGM,” said Stanbic.

KCB, which recently held its virtual AGM, says previous outcomes have shown that virtual meetings have given room for more investors to attend.

For instance, the lender says the use of virtual meeting technology during the AGM held in June last year allowed a larger number of shareholders to participate in the AGM regardless of their geographic location.

KCB says 17,375 shareholders attended and voted on the resolutions during last year’s AGM compared to 4,905 shareholders who attended the physical meeting held in May 2019.

“Shareholders were given an opportunity to submit written questions to KCB Group before the AGM and were also able to participate in the live KCB Group AGM vote and ask questions online,” says KCB.

Virtual meetings have also been hailed as an opportunity to enhance corporate governance and transparency by allowing more direct shareholder participation as opposed to the use of proxies.

Electronic voting during the AGMs has also allowed firms to get and publish poll results within 24 hours following the conclusion of the meetings.

But for many investors, a physical gathering meant much more than just worrying about the data bundles or speed of voting.

They feel they can no longer vocally challenge the management and the board from the floor because their voices can be muted.

Some critics see virtual-only shareholder meetings as an unsatisfactory substitute for in-person meetings as they risk letting management and boards duck accountability and also threaten the rights of shareholders to be heard.

The opportunity to openly ask unfiltered questions, follow up when those responses are unsatisfactory, hear unmediated responses and view the reactions of other AGM participants are some of the key things that an electronic meeting cannot guarantee.

Read: State seeks to anchor virtual AGMs in law

Many investors have been using physical AGMs to catch up with old friends, share a meal, directly ask questions, take photos with the management and reminisce the times they bought stakes in the companies and even console each other when dividend taps run dry.

“Are in-person meetings a thing of the past? I think we overcame the pandemic,” asked Victor Amulabu, a Sasini shareholder during the virtual AGM held in March.

The onset of the Covid-19 pandemic, which resulted in a ban on physical gatherings, caught off guard many firms with Articles of Association (AoA) that had only provided for physical AGMs.

An AoA is a document that defines the purpose of a company, regulations and outlines how tasks should be accomplished.

Firms had to depend on a High Court order that gave them a special window to hold virtual meetings.

They then used such gatherings to get approval from shareholders to introduce the option of virtual meetings.

Kenya’s trend for virtual meetings mirrors that of Western countries such as the US and UK where the adoption of electronic meetings rose sharply at the onset of Covid-19 and now looks set to outlive the pandemic.

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