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UPDATE 1-Campaign group urges UK to keep virtual annual meetings temporary

Thu, 26th Mar 2020 12:38

* Could prevent investors from attending - ShareAction

* Online questions could lead to 'cherry-picking' by firms

* ShareAction letter follows proposals from BEIS on
Wednesday
(Adds business ministry comment)

By Simon Jessop and Huw Jones

LONDON, March 26 (Reuters) - The use of virtual annual
meetings by companies during the coronavirus epidemic must not
become the norm once restrictions on people's movements are
lifted, responsible investment campaign group ShareAction said
on Thursday.

Such a move could prevent investors from attending and
holding companies to account ShareAction said in a letter to the
head of Britain's business ministry seen by Reuters.

"A significant proportion of retail shareholders are older
people who tend to be less comfortable with using the kind of
technology required to host a digital AGM," Policy Manager
Rachel Haworth said in the letter to Alok Sharma.

"In addition, physical AGMs allow retail shareholders and
the board a unique and unscripted opportunity to meet and have
conversations in person."

While some companies had plans in place to allow investors
to submit a question electronically, Haworth said this could
also be abused.

"If attendees can only submit questions in advance and
cannot ‘raise their hand’ and ask them in real time, this could
allow companies to cherry-pick which questions they answer," she
said.

Earlier this week the London Stock Exchange said it would
back temporarily allowing companies to hold their annual
meetings electronically this year because of the pandemic.

The Chartered Governance Institute has published guidance on
annual meetings during the epidemic, drawn up in conjunction
with the Financial Reporting Council, which regulates auditors
and corporate governance codes, and law firm Slaughter & May.

Virtual-only meetings are not viable given they may not
constitute valid meetings, but the articles of some companies
allow them to hold hybrid meetings, meaning a combination of
physical and electronic, the guidance said.

Companies have the option of changing their articles to
allow online meetings.

"The Companies Act 2006 provides flexibility to hold a
virtual AGM, but a company’s own Articles of Association, rules
written and agreed by the company, must allow for that as an
option," a business ministry spokesman said.

(Reporting by Simon Jessop, editing by Larry King, Kirsten
Donovan)

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