4 February 2022 Wilma Rix Corporate Governance - Covid-19 (Novel Coronavirus) - Reporting, meetings and transactional issues - Diversity and Inclusion - Employment and Incentives - Environment and Climate Change - ESG - Climate change - Risk and governance

AGMs Update 2022 - A guide for UK-listed companies

Although Covid-related restrictions have been lifted, UK-listed companies preparing for 2022 AGMs and other general meetings cannot assume a return to business as usual.

Meeting formats

Many companies are already evaluating whether shareholders should be able to attend the AGM electronically, as well as at a physical form of meeting which is open to all. 

Key questions include:

  • What are the company’s own circumstances? Size, shareholder base and other company-specific factors are relevant as “one size does not fit all”. Some companies found last year that investor take up of electronic facilities was disappointing. Many, however, still see hybrid physical and electronic shareholder meetings as the future.
  • What’s market practice? Notices of meeting issued so far this year show that physical-only meetings remain popular. However, about a third of companies are opting for electronic facilities as well.
  • What is the current regulatory guidance? The FRC is due to issue updated guidance soon on meetings and engagement best practice. Existing recommendations remain valid, though. In particular, these seek to promote shareholder rights and effective procedures, to allow for proper scrutiny and questions and to enable investor votes. Companies should also provide clear and timely information, with regard to wider stakeholders as well as their own members.
AGM business

When it comes to AGM business and preparing for meeting Q&A, companies need to consider the intensifying focus on climate change impacts and other social and governance issues. These considerations are particularly relevant to director elections and votes on remuneration, both of which can attract a high level of investor and press scrutiny.

Topical issues, this year, include:

  • progress on diversity – both in terms of gender and of ethnicity,
  • demonstrating accountability for climate-related risks and opportunities, and
  • whether executive pay outcomes are justified and fair, especially when measured against the company’s handling of Covid-related issues.

In addition, some companies will this year be adding a new “Say on Climate” resolution to their AGM agenda and/or having to deal with activist requests for greater action on ESG issues. Last year, a number of listed companies (in the UK and elsewhere) offered a vote on a climate transition plan at their AGM and/or resolutions to approve their climate reporting and targets. Investors continue to have mixed views on these votes, though, as some prefer to focus on the highest emitting companies. Others want boards to concentrate on drawing up robust transition plans and strategies, rather than a vote. The UK government has now stated that transition plans will become mandatory (although not earlier than 2023). Updated guidance from the most influential proxy advisors helpfully gives more detail for this year on the Say on Climate approaches they will recommend.

Meeting procedures

The FRC has warned that some companies are not keeping shareholders updated where there is a significant dissent vote against a resolution (20%+). Companies should follow the Corporate Governance Code and Investment Association guidance on this and also note the administrative updates to the FCA’s rules which clarify procedures and simplify document display requirements.

For more information on these issues, including a summary of best practice meeting guidance, see our AGMs Update 2022 guide.