Preparing for your AGM in 2021

​Recently, we hosted a webinar to discuss issues impacting company general meetings and year-end reporting in 2021, and how companies might best account for them in their planning. The discussion included aspects such as the use of technology to support governance efforts, considerations for their annual reporting in relation to s.172 disclosures, and practical considerations for an AGM in a post 2020-COVID environment with the evident increased focus on stakeholder engagement.

In this article we are going to explore some of these aspects in a bit more detail and provide some signposts to useful resources and assistance available to you from the Computershare team.  

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​Maturing your governance framework in a digital age

We see more and more clients wanting to drive innovation regarding technology and a greater awareness about what is possible with technology today and in the future. This is evident from the GEMS Lead and Learn forums, which we host. These forums provide the opportunity for company secretaries and governance professionals to exchange insights and views on how technology is used and sharing thoughts and ideas about how to work smarter, save time and create value. Our technology white paper, "Maturing Your Governance Framework in a Digital Age", was a result of these forums, the insight we received from the attendees, as well as what we hear from our clients generally.

The key themes resulting from our forums, which often resonate with other clients when we share this information, were that they are looking for technology which can:

• achieve a "single version of the truth" (i.e. a reliable single source of data which can be used by all parts of the business)
• help clients navigate the ever-changing governance and compliance requirements from across the globe
• use data intelligently through analytics and data visualisation
• save time by managing workflows more efficiently

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​Technology and annual reporting

Driving innovation, understanding what your legal entity management technology can do for you and maximising that usage will help you in countless ways, including with your annual reporting.

It can help by: 

​If you would like to attend our GEMS Lead and Learn forums, or would like to discuss any support regarding the above, please feel free to contact Georgina Milis, Computershare Governance Solutions Director.

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​s.172 Statements – first year review

As you'll know back in 2018 the Companies (Miscellaneous) Reporting Regulations introduced the requirement for a statement to be included within the strategic report delivering against the objectives shown in the graphic below. This requirement was supported by the updated Corporate Governance Code.

The statements should achieve the following aspects: 

​From a review of the statements released so far in 2020 (focusing on the work of Boards in 2019), it’s clear that three general approaches have been taken to reporting, as described below. Having said that, there aren’t limitations that require you to follow a single approach and it’s important to report in a way that conveys an authentic and balanced view of the work of the board of the company in question.

​Nicholas Pervin, Computershare Governance Solutions Manager advises that in order to get best out of your statements, companies should ensure that they don't duplicate information, while making sure readers of the report can easily identify where to find relevant information.

His advice is that simply relying on a company's framework of policies and processes is not enough and companies need to consider all material issues that are likely to impact the long-term success of the company.

The s.172 statement is the opportunity to tell a balanced story of the company and reflect on the board's oversight and effectiveness. Where possible, consider the use of case studies to provide colour and depth to the story you are trying to tell.

Remember to start early and use evidence you've collected throughout the year (e.g. board minutes, investor roadshows, etc.) when writing your statements. Consider how the statements reflect the widest possible view of your stakeholders. Don't forget you'll need to be clear on the impact of COVID, Brexit and other ESG matters in your 2021 reports .

Issuers with a premium listing on the London Stock Exchange should also remember to be mindful that they too may be subject to the reporting requirements of the updated Corporate Governance Code. As such, they will need to provide a report on how key stakeholder interests have been considered in board discussions or explain why they are not complying with the Corporate Governance Code, despite the s.172 disclosures only relating to UK incorporated companies.

If you need assistance in the planning, preparation or drafting of your statements, Nicholas and his colleagues are available, to discuss annual reporting requirements, ensuring your own company knowledge is paired with a broader market and best practice perspective. 

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​Key reporting considerations

Beyond s.172 disclosures, it is important that governance professionals don't forget some other key considerations for the annual report. Based on our experience and reviews of the market, here are some of the things that we think will be of most importance as you draft your 2021 reports.

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Early planning for your AGM 

During the webinar we considered the impact 2020 would have on holding an AGM in 2021. While the market for the latter part of the 2020 season (and the first three months of 2021) is able to rely on the emergency provisions found within the UK's Corporate Governance & Insolvency Act, current expectation is that these accommodations will not be available beyond March 2021. 

The legislation only permits the UK government to extend the provisions in three-month intervals and not beyond 5 April 2021. The current extension now runs out on 30 March 2021, which while great news for those issuers planning meetings in the first quarter, provides no certainty for issuers planning meetings thereafter, including during the height of the 2021 season in April and May.

However, for those clients incorporated elsewhere in Europe, the story may be somewhat different.

​Recent discussions with the Financial Reporting Council indicate a desire to consider practical solutions to the challenge associated with shareholder participation once the emergency legislation in the UK falls away after 30 March 2021. This aligns with the announced work of the FRC on establishing a working group detailed within their Review of the 2020 season.

The report also identified the benefits of introducing technology both to aid in contingency planning and improving shareholder engagement where restrictions are in place on social gatherings.

When planning for 2021 it is incumbent on Issuers to identify what the best solution will be for your board and your stakeholders. For those companies who feel a fully virtual meeting, or even a hybrid meeting, is not appropriate given their circumstances, active consideration should be given to a webcast, which is a strong alternative to a simple audiocast.

Many shareholder groups and proxy advisers are growing in their support of technology and are keen on the introduction of digital voting solutions so long as shareholders, proxies and corporate representatives clearly understand how to use the options available to them. Care should be taken to ensure that whatever format of meeting you decide is most appropriate for your circumstances, there is no real or apparent attempt to discourage shareholder engagement or limit the ability of stakeholders to hold the company to account.

The means by which companies facilitate shareholder/stakeholder engagement is going to be in focus in 2021 regardless of where you are incorporated. We've seen shareholder groups complain about not being able to properly hold the board to account during 2020. So, consider if separate engagement sessions or events are appropriate. Or, consider if the solution discussed by the FRC may work for you, whereby the company might consider holding an engagement session before the proxy voting of the meeting closes, thus ensuring that Issuers can still complete the formal part of the business having had those more traditional Q&A with their shareholders.

The best practice for 2021 is: 

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What clients have told us

We've been asking clients for their views on the likely format of their 2021 company general meeting. Here's what they told us.

First, we asked for their view on the likely format of their meeting should the current restrictions on social gatherings/meetings remain broadly the same as they are now. Most respondents (39%) felt that their first choice would be to keep a closed-door meeting. As referenced above, this approach is likely to come in for some criticism from the proxy advisers, shareholder groups and potentially also the FRC and government. 

However, 31% of respondents felt they would be exploring a hybrid meeting solution, combining a physical venue with remote participation options. The third most favoured approach was a closed-door meeting with a separate Q&A session.

Our survey then asked respondents to suggest what their preferred meeting format would be if the current restrictions on social gatherings were withdrawn and more traditional meetings can be held. Most respondents (61%) suggested that their preferred option would be a return to pre-pandemic style meetings, with a physical venue. This too is likely to attract some criticism given the newfound acceptance of both the technology to facilitate remote participation by shareholders and the potential benefits that could be derived by making meetings more open to geographically dispersed shareholders and those unable to attend a chosen venue at a specific date/time. Again, the second most common choice for respondents (19%) was to consider the introduction of a hybrid solution.

At Computershare we've witnessed a significant shift taking place in the US and many other global markets, with rapid adoption of technology designed to facilitate remote participation. However, the UK and Irish markets have been slow to follow suit, and the absence of legislation to ensure fully virtual meetings are beyond challenge, is a barrier for some. However, the impact of COVID-19 on the speed of change has been immense, and it feels like a matter of time before remote meeting participation is adopted as best practice.

A third question in our survey asked respondents to rank what might influence their decision on how they held their 2021 AGM. Respondents equally felt that confidence in technology being used and the desire to provide shareholders with a way to participate were the most important factors, quickly followed by difficulties with having board members attend and the cost of available technology solutions. 

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​Concluding remarks

2021 is sure to be another challenging year both in terms of drafting reports, disclosures and statements that provide a true, fair and accurate reflection of their achievements and challenges; and in terms of engaging with shareholders and stakeholders. It's worth making sure you are planning early and factoring in what may happen if restrictions aren't lifted or governmental clarity is not quick to arrive.

Computershare are here to assist, whether it is with helping you establish an effective governance framework, crafting your disclosures or planning and executing your AGM. 

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