On 9 February 2016, the Quoted Companies Alliance, together with Charles Russell Speechlys LLP and the Institute of Chartered Secretaries and Admnistrators (ICSA), held an event of essential tips on how to avoid difficult AGMs and what to do should issues still arise, in preparation for the 2016 'AGM Season'.
To make the evening more entertaining the event was based around a mock AGM role play which covered various possible scenarios, including but not limited to, the responsibilities of the Chairman, attempts to replace the Chair and amend resolutions, handling the press and shareholder activism more widely. There was more than one unruly shareholder in the room, and through a series of questionable accents and props, the team were able to draw out the key issues and best practice when dealing with such demands. "Keep calm, and carry on" was the catch phrase of the evening, with other more practical guidance covering the following.
It was agreed that preparation, and even rehearsing the meeting – was important and this was something that in-house teams, lawyers and financial PR agencies could assist with. Often Chairmen may not have been in this position before, or only infrequently.
Activist shareholders are not always to be feared, and may well be seeking a positive outcome for the company. However, it is important to manage this ahead of the meeting and engage and plan early. The Company should put themselves into the shareholders' shoes and work with financial PR agencies and proxy agents to understand how the shareholders will vote and prepare responses to issues ahead of time.
A New Breed of Campaigner
There is a new breed of campaigner who is professionally trained to make their point effectively at company AGMs. They are prepared to articulate the particular issues at hand in a persuasive manner, to rally shareholders for change. This can include aspects such as the Company's approach to the living wage, CSR policies and other emotive issues. Be prepared to respond to these protesters.
Involvement of the Press
There was much debate on this issue. Generally speaking, the view was to allow press to attend the meeting. Members of the press could take shares or represent a shareholder in any case, and excluding them can present poorly. Messaging should be considered in advance and any obligations to announce or keep certain information confidential considered ahead of the meeting.
Ensure you have full details of proxy voting ahead of the meeting, particularly if you are proposing a challenging resolution. Remember that shareholders can change their vote at the meeting itself (notwithstanding having already voted by proxy).
Gauging the Mood of the Meeting
Make sure that the mood of the meeting is taken into account, as well as the legal formalities. It may be for example that a procedural motion to seek the consent of the meeting to an exercise of discretion will help carry the room with you.
Role of the Chairman
The Chairman's role is to represent the best interests of the Company and the Shareholders and to ascertain the views of the meeting (those present in person or by proxy or representative). It is important to facilitate the discussion and ensure that the views of the meeting are represented in the voting. Questions can and should be passed on to other relevant members of the Board where appropriate; chairmen do not have to field all responses themselves.
If you have any questions about this document please contact David Hicks, Partner at Charles Russell Speechlys.
The Quoted Companies Alliance regularly holds events in partnership with Charles Russell Speechlys for quoted companies on how to avoid negative boardroom situations. For more information about this or similar events, please email Samantha Green.