SGX: Listed firms need to provide live engagement, voting at AGMs

Companies will have to provide live engagement and voting at all annual general meetings (AGMs), especially those that are fully virtual, to ensure shareholders are still able to exercise their rights, said the Singapore Exchange in a regulator's column yesterday.

Virtual meetings have become commonplace in the last two years amid the Covid-19 pandemic, but there is a need to ensure that shareholders can still engage company boards, wrote SGX Regulation (SGX RegCo) chief executive Tan Boon Gin in the column.

"Shareholders must be able to make decisions on an informed basis. This is true when making decisions on whether to buy, hold or sell securities, as well as when voting on corporate actions and other resolutions at shareholder general meetings," he said. This means shareholders should still have the right to attend, ask questions, and communicate their views at general meetings. They should also be able to appoint proxies or to vote at general meetings.

Companies that choose to conduct fully virtual general meetings must use both real-time electronic voting and real-time electronic communication, SGX RegCo said in its updated guidelines. Mr Tan said: "Notably, several SGX-listed companies have successfully done so at their virtual AGMs despite a fairly large shareholder base and consequently a high number of attending shareholders."

He said in his column that with the relaxation of safe management measures, companies can hold physical general meetings again, or stick to a virtual or hybrid format. But all companies holding annual general meetings for financial years that end on June 30 or after this year must conform to the new guidelines set out by SGX RegCo.

Issuers that hold any other general meeting on or after Oct 1 to seek shareholder approval for corporate transactions must also meet these expectations.

Corporate governance experts said these moves are vital to ensure shareholders get their say in the AGMs and added that hybrid AGMs should be the way forward.

Securities Investors Association Singapore (Sias) chief executive David Gerald said virtual AGMs have been non-interactive and mostly one-way broadcasts. "The main drawback is that questions by shareholders have to be submitted in advance, which means that companies can choose the questions they want to answer and have the liberty to decide which ones to ignore. This in turn leads to virtual AGMs becoming sterile affairs... Shareholders also lack the ability to pose follow-up questions and probe deeper into the issues raised."

Sias has also noticed that there has been lower attendance at virtual AGMs compared with physical AGMs. "Sias feels strongly that virtual-only AGMs (should) not be allowed as we are moving into a Covid-19 endemic era. Having hybrid AGMs should reverse a lot of the negative developments in the past two years," Mr Gerald said.

National University of Singapore business professor Lawrence Loh noted: "When companies hold virtual AGMs, the balance of power is usually on their side versus the shareholders. They can control the flow or even the selection of questions and minimise supplementary discussions that can go into the depth of the issues."

TSMP Law joint managing partner Stefanie Yuen Thio said: "Attending an AGM and being able to question the directors and management team, and letting those answers inform your vote, is a key right of each shareholder. If all companies rely only on virtual meetings, this relationship of trust between shareholders and management would erode over time."

Gibson Dunn & Crutcher partner Robson Lee said: "In the endemic Covid-19 era, issuers should either resume physical meetings or hold hybrid AGMs with real-time electronic communication facilities to enable questions (including any follow-up questions) to be raised and properly responded to in a timely manner."