Nearly half of FTSE 100 AGMs could be affected by Covid-19 outbreak

  • According to analysis by global law firm Linklaters, 41 of the FTSE 100 are due to hold their AGMs in April and May – the expected ‘peak’ of Covid-19
  • AGMs for year-end reporters must be held before the summer so investors can elect directors and make key decisions which allow companies to operate as normal
  • It should be possible for most AGMs to still go ahead, even with a small number of shareholders present – and investors won’t lose their right to vote as they can vote by proxy
  • With smaller in-person gatherings likely, firms can also consider online options, such as live-streaming and questions submitted online, so shareholders can still be kept informed and take part

Nearly half of FTSE 100 companies are due to hold their AGMs in April and May 2020 but the Covid-19 outbreak raises questions about whether shareholder meetings will be able to go ahead as usual. According to analysis by global law firm Linklaters, 41 of the largest UK-listed companies could see a very low turnout for their AGMs if the public is advised to avoid large gatherings or there are widescale travel restrictions.

It is a legal requirement for companies with a December year-end to hold their meetings before July 2020. With the outbreak expected to last for several months, the need to make critical business decisions and legal deadlines will put pressure on companies to continue with existing plans, rather than postponing until later in the year.

It should be possible for most AGMs to still go ahead, even with only a small number of shareholders present, as the legal quorum requirement for a UK company meeting is typically low.

Investors can have their say on the business of the meeting by instructing the company in advance about how they wish their votes to be cast. This paper-based or online option is already widely available, and shareholders should be particularly encouraged to use it this year. Reports confirm that online voting platforms for investors are in high demand already.

Embracing technology

In addition, some firms are considering other technologies to give shareholders the chance to take part in the AGM remotely. For example, companies that do not currently live-stream their AGM, or make a recording available at a later date, may decide to do so in 2020 to give shareholders the chance to watch presentations and listen to the Q&As, even if they choose not to attend the meeting in person.

Companies can also encourage investors to put their questions for the management in writing in advance of the AGM, for example, by submitting them through a dedicated online portal or email address.

‘Hybrid’ meetings where shareholders are an official part of the AGM even though they are accessing it remotely have so far been unusual in the UK, and companies seeking to hold their AGM in this way should make sure that they are legally and logistically in a position to do so.

Lucy Fergusson, corporate partner at Linklaters, commented:

“As AGM season approaches, businesses face uncertainty about whether shareholders will stay away from company meetings because of the Covid-19 outbreak. AGMs will normally be able to go ahead, even if many shareholders choose (or are forced) to stay away, as the quorum requirement for the AGM to be legally binding is very low for most UK companies.
And whatever happens, shareholders won’t lose their right to vote as they can vote by proxy before the AGM takes place. Other arrangements which some companies are considering so that investors can be kept informed and have their say include live-streaming a webcast of the meeting and asking for questions to be submitted online. 
Traditionally most investors prefer to be physically present so they can hear directly from and question company executives. However, 2020 could see much smaller gatherings and companies may want to consider other ways of communicating with shareholders.”

Methodology:

Data taken from websites of FTSE 100 companies. 41 firms have confirmed plans for their AGMs to take place between April 1st and 31st May 2020. A further 15 are yet to be confirmed. FTSE 100 constituent list as of pre-market opening on 9th March 2020.