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

SINGAPORE - 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 on Monday (May 23).

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 as they do in physical meetings, wrote 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.

He added that while virtual meetings have their benefits, such as in ensuring the health and safety of members, they also pose challenges.

"The physical general meeting provides shareholders with the ability to directly and immediately engage with the Board and vote thereafter. SGX RegCo similarly expects issuers to accord shareholders with the same full rights should they choose to hold virtual-only meetings," he said in the column.

This means that 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 at their general meetings, SGX RegCo said in its updated guidelines.

"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," Mr Tan said.

The electronic voting systems have to accurately count all votes cast in the meeting. They also have to be capable of providing records that can be used to verify the recording and counting of votes, SGX added on its website.

Each vote has to be verified as cast by shareholders or members, or proxies. The chairman of the meeting must also declare by electronic means the result of the votes during the meeting.

Mr Tan added 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 firms holding their 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, he said.

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, lacking in spontaneity and there is no lively question and answer session. Shareholders also lack the ability to pose follow up questions and probe deeper into the issues raised," he said.

Shareholders also often vote before the AGM and before their questions are answered, he added.

Meanwhile, physical AGMs give shareholders a once-a-year opportunity to meet directors and management face-to-face and ask questions about their investments.

"This can usually lead to robust discussions about performance, strategies, governance and future direction. Proposals and resolutions can also be debated before votes are cast, instead of boilerplate statements prepared by corporate communications for dissemination," he said.

Sias has also noticed that there has been lower attendance at virtual AGMs as compared to physical AGMs.

"SIAS feel 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 negative developments in the past two years," he 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."

She added that ESR-Logos Reit, of which she is chairman, has been having hybrid meetings whenever possible, with a live question and answer system.

Gibson Dunn & Crutcher partner Robson Lee said purely virtual AGMs over the last two years with no real-time engagement have set corporate governance back.

"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."