Companies are clinging to virtual annual general meetings despite investor pressure for real meetings to resume once the prohibition on sizable indoor gatherings was lifted.
Many businesses, particularly those listed on the Nairobi Securities Exchange, have kept up their virtual AGM practice, which they began when Kenya was struck by the Covid-19 outbreak in the middle of 2020.
Due to the pandemic, businesses had to ask investors for permission to modify internal policies to permit either in-person or virtual meetings.
However, businesses have chosen the virtual alternative even though some shareholders want to see a return to actual meetings.
The electronic route has been taken by all NSE companies that have held or intend to hold AGMs, including KCB, Equity, Co-operative Bank of Kenya, Sasini, Sameer, TransCentury, Britam, TPS Eastern Africa, and Crown Paints Kenya.
The majority of significant decisions, such as removing a director or CEO, approving the budget, or increasing employee benefits, can now be made virtually at a formal meeting of the board or shareholders.
The decision has allowed businesses to save millions of shillings that they would have otherwise spent on gifts for shareholders such branded umbrellas, flights, lunches, printing annual reports, and hotel reservations.
But shareholders are unwilling to adapt to the reality of the new world, where they must access digital platforms to stay informed about their companies and ask questions of people sitting a long way away and obtain responses.
One shareholder asked Stanbic Bank, which recently had its virtual AGM, when it planned to host physical meetings for its annual general meeting, special meetings, and extraordinary meetings.
In response, Stanbic stated that virtual meetings have evolved into the “new norm” due to their convenience and inclusivity, particularly for investors outside of Nairobi and Kenya.
“Having said that, we don’t want to lose touch with you. As a result, we will give 2GB data packages to each shareholder who has logged into the AGM, according to Stanbic.
KCB, which recently hosted its virtual AGM, claims that prior results have demonstrated that virtual meetings have allowed for greater investor attendance.
For instance, the lender claims that the AGM conducted in June of last year was made more inclusive of shareholders from all around the world thanks to the use of virtual meeting technology.
In contrast to the 4,905 shareholders who physically attended the meeting in May 2019, KCB reports that 17,375 shareholders participated in and voted on the resolutions during the AGM held last year.
“Shareholders were given the opportunity to submit written questions to KCB Group before the AGM and were also able to participate in the live KCB Group AGM vote and ask questions online,” according to KCB.
By permitting more direct shareholder engagement instead of the use of proxies, virtual meetings have also been praised as a chance to improve corporate governance and transparency.
Companies are now able to get and publish poll results from AGMs within 24 hours of the meeting’s completion thanks to electronic voting.
But for many investors, attending a physical event meant much more than just being concerned about data bundles or voting speed.
They believe that because their voices can be suppressed, they are no longer able to publicly criticize the board and administration.
Virtual-only shareholder meetings have their detractors because they run the risk of letting management and boards avoid taking responsibility and endangering shareholders’ rights to be heard.
Some of the most important elements that an electronic meeting cannot ensure are the ability to raise questions in an unfiltered manner, follow up when responses are unsatisfactory, hear responses without mediation, and observe the reactions of other AGM attendees.
Many investors use live AGMs as an opportunity to catch up with old friends, have a meal, speak with management face-to-face, ask direct questions, and even commiserate with one another when dividends stop coming in.
Are face-to-face meetings becoming obsolete? Victor Amulabu, a Sasini shareholder, stated during the March virtual AGM, “I think we overcame the pandemic.
Many businesses with Articles of Association that only allowed for physical AGMs were caught off guard when the Covid-19 outbreak broke out and led to a prohibition on physical gatherings.
An AoA is a document that explains a company’s goals, rules, and how duties should be carried out.
In order to organize virtual meetings, businesses had to rely on a High Court decision that provided a specific window of time.
After that, they leveraged these events to win over shareholders and offer the option of virtual meetings.
Kenya’s tendency toward virtual meetings is similar to that of Western nations like the US and UK, where the use of electronic meetings spiked during the start of the Covid-19 pandemic and now appears to be here to stay.
