The UK government will clarify legitimate grey areas as early as the summer when it comes to whether businesses can hold online general meetings.
The upcoming audit and corporate governance bill “clears the legality” of virtual meetings, including AGM, authorities told the Financial Times, taking into account the interests of company members. The government wants to introduce legislation before the Congress summer holidays.
It should help solve a troublesome question for large UK listed companies about whether they can do it without the cost of in-person AGM. HSBC is one of those who have explored the move to AGM completely online.
Extinction Rebellion Protesters outside HSBC’s 2022 AGM© Dan Pearson/Alamy
The move to encourage UK AGMs online reflects trends seen in other countries. Financial Technology Company Broadridge hosted 311 virtual only AGMs in North America in 2019, increasing to 2,448 in 2024. They are also popular in major powers such as Australia and South Africa.
High-end retailer Jimmy Chew was the first big company in the UK to hold a completely virtual annual meeting in 2016. The Covid-19 pandemic has accelerated the number of companies using digital technology to allow shareholders to step up their control during the lockdown.
Since then, many UK listed companies have moved to “hybrid” AGMs that can participate in either in-person or online.
A handful are entirely online, reflecting the fact that many shareholders interact with the directors in person and want to explain them directly.
A study by law firm White & Case suggested that last year there were only four companies in the UK holding fully virtual AGMs. Clarksons, Tui (subscribed in London since then), Aston Martin, Haleon.
Bacca-Flavor, a food producer group whose rival Greencore agreed to acquire £1.2 billion in April, will be on that list at this month’s virtual meeting set.
It is ambiguous about whether AGM is completely virtual, and the current law regarding shareholder meetings dated back to 1948 and recently updated in 2006 is ambiguous.
Corporate law refers to a “place of meeting,” which encourages disagreement among lawyers about whether it means a physical or metaphysical online location.
Protesters outside Barclays’ 2012 AGM©Oli Scarff/Getty Images
Officials said the law attempts to clarify the confusion. The company must then change the association’s article to allow shareholder-only AGM.
One official said the business sector is “accepting” the idea of updating the business laws that involve various stakeholders of interest. “The introduction of changes depends on legislative timetables,” they said.
The Investment Association, the trade body representing the asset manager overseeing £9.1TN, has approved the hybrid meeting but said it is concerned about a virtual only event.
The group said it was the only time that AGM is publicly responsible for all shareholders. “The ‘virtual only’ AGM removes this accountability due to the remoteness of participants.”
“It is difficult for participants to identify the opinions of their fellow participants in a virtually exclusive format and register contracts (or differences of opinion). Companies that take a “virtually only” approach also risk giving the impression that they are asking shareholder questions or trying to participate, and will not want to address shareholder questions. ”
Once famous for its gorgeous AGM, Marks and Spencer have settled on hosting a hybrid event after facing shareholder backlash against what was fully digital in 2023.
At the time, the retailer told investors that it intended to travel to the event that board members were not available for interaction and no snacks were served. Since then, the company has become more open to the desire of a small number of vocal shareholders to attend in person.
M&S tried to migrate to a virtual only AGM, but had to pivot to a hybrid event © Stephen Hird/Reuters
Peter Parry, a member of the UK Shareholders Association’s policy committee, representing retail investors, told FT that some companies had long pushed to limit physical AGM.
“Companies will usually be very expensive to run AGMs and they don’t know how many people will come, so they’ll hire a big hall and argue that only 10 people might show up,” he said. “They can pay for them by offering them sandwiches (…) It’s spending a lot of money, some people haven’t disappeared, so they say, ‘What’s the point?’
Parry said his organization helped to use the hybrid meetings more, making it easier to touch shareholders who lived abroad and far-reaching corners of the country. But he warned more businesses that only do virtual.
“The concern is that you can pretty much do what the board wants to do, and when things like questions come up, people can get questions submitted in advance and focus together in groups.
One corporate lawyer said the idea of being virtually alone could quickly gain critical mass. “The numbers are safe, so once one of the big companies gets virtual, the others will follow,” they said.
Industry figures show that “most” banks want to push towards virtual only AGMs, with some of the biggest banks saying they have to build security to deal with protesters who are suspending meetings.
In late 2020, the Financial Reporting Council issued a report on how virtual and hybrid AGMs have occurred as a result of the community pandemic.
The FRC said the traditional approach to such meetings is a “confinement jacket to progress,” but the move to more tech meetings will only advance shareholder support and ensure that changes do not lead to “deprivation.”
TUI’s 2020 AGM has moved to virtual meetings ©Focke Strangmann/EPA-EFE
“The ability to directly engage with the company’s directors, “see the white of their eyes” and understand the “room mood” is all important to many people, and it’s difficult to replicate something like that in a virtual meeting,” the regulator said.
White & Case noted that hybrid AGMs can take different forms. Astrazeneca, for example, uses “studio terms” in physical buildings, discouraging shareholders from attending. Some other companies, such as BAE Systems and Rolls-Royce, were holding hybrid meetings that encouraged shareholders to attend remotely.
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Lucy Reeve, a corporate partner at law firm Linklaters, predicts the law will be a “catalyst” for companies to rethink their approach to online AGM, adding that they should consider whether individual associations need to be revised.
She predicted that large companies would move online only first. This is because small businesses may find it disproportionately expensive to hold meetings online.
“We are a little late in accepting technology. The laws governing shareholder meetings were written before everyone dreamed of Zoom.
Additional Reports by Laura Onita of London
