This article first appeared in Forum, The Edge Malaysia Weekly on August 22, 2022 - August 28, 2022

After nearly two years of battling the Covid-19 pandemic, Malaysia finally moved into the “transition to endemicity” on April 1, 2022. With restrictions on large gatherings and social distancing loosened, companies are free to hold physical general meetings. Nevertheless, about two-thirds of the 598 general meetings held during the recent AGM season — April to June — remained online.

Post pandemic, will our public-listed companies (PLCs) revert to the traditional physical general meetings, or will they continue to host their meetings in a virtual room? This is a popular question raised by shareholders at virtual meetings. In most meetings, no definite answer was given.

The concept of virtual general meetings entails voting in absentia. Remote shareholders’ participation at general meetings was introduced by the Securities Commission Malaysia (SC) in 2017 in the Malaysian Code on Corporate Governance (MCCG), Practice 12.3. Until the Covid-19 outbreak in 2020, the rate of adoption of Practice 12.3 was near zero. Interestingly, many PLCs had indicated in their CG Report an extremely long time frame of five years to adopt it. Nonetheless, the unprecedented pandemic accelerated the adoption rate to more than 80% in 2020/21.

Like it or not, the Covid-19 pandemic has changed the way we communicate and interact. With the advance in technologies, communication and interaction have become simpler and ubiquitous, but in many ways, there is a trade-off in human-to-human interaction. Virtual meetings allow people across continents and countries to be virtually connected, but they are personally isolated.

The most concerning issues when it comes to virtual general meetings are those regarding shareholders’ engagement, transparency and accountability. The most rampant complaint about virtual AGMs is that the board does not answer all questions raised by shareholders, but cherry-picks what its answers. This, in a way, will lead to a loss of accountability and transparency.

The complaint is not baseless. During the last AGM season, only one out of seven PLCs replied when I raised questions at their AGMs. In most cases, the chairman would pre-empt scrutiny by saying that “due to time constraints, for questions not answered during the AGM, the reply will be emailed to the shareholders concerned and published on the company’s website”. What are the reasons for the “time constraint”? Is it due to the board members’ busy schedules? Or is it due to the time limit imposed by the meeting platform service provider? Shareholders are puzzled.

Regardless of the reasons for the time constraints, the board should not limit the time allocated for the AGM. After all, the AGM is often the only event where minority shareholders can engage with the board, voice their concerns and raise questions to hold the board and management accountable for the performance of the company.

The “cherry-picking of questions” hardly happens at physical general meetings because the questions raised by shareholders/proxies are laid before all participants. To mirror the physical meetings and to resolve the cherry-picking issue, the SC, in MCCG 2021, requires PLCs to make questions posed by shareholders visible to all participants during the meeting itself (Practice 13.5). The purpose is to ensure that shareholders in the virtual room have access to all questions raised during the meeting itself and, if at all, questions not addressed by the board. This, hopefully, will minimise the incidence of cherry-picking questions.

Looking back on past AGMs, most displayed only the questions addressed at the AGMs, instead of all questions raised at the meetings. Displaying only questions addressed by the board does not meet the spirit of Practice 13.5 of MCCG 2021 and will not resolve the issue of cherry-picking questions. Hence, strictly, the PLC concerned is not considered to have adopted it. Many PLCs have not accurately reported the application of Practice 13.5 in their CG Report.

In the context of accountability and transparency, all questions raised, regardless of whether they were addressed at the meeting, should be made visible to all meeting participants. It is indeed very encouraging to see some relatively small PLCs practising this in their recent AGMs.

Today, with the increase in demand for online events, there are more virtual meeting platforms than ever in the market. The procedures for registration, participation and voting are different among these platforms. Some require users to register in advance while others allow direct login to the meeting. The deadlines for registration are also different: some close as early as 48 hours before the meeting starts and others allow registration up to the time of the meeting. This could cause confusion to shareholders, especially seniors. Instances of shareholders missing the meetings due to early deadlines are not unusual.

Mirroring a physical meeting, registration should be opened right up to before the meeting starts. In any case, the deadline for registration should be standardised and should not be as early as 48 hours before the time for holding the meeting.

Given that not all meeting participants would have the same level of knowledge in new technology and the skills to resolve technical issues, the support/helpline team for troubleshooting should be competent and easily accessible. To be fair, the administrative note for all virtual general meetings will disclose the contact details of the helpline. However, often, the line is either engaged or not answered. PLCs should ensure that helpline support is sufficient and efficient.

Live chat support on the platform that provides quick responses to queries and allows the uploading of documents would be useful.

Although we have seen improvements in the conduct of virtual AGMs in the last two years, there were also instances of abuse that dampened the confidence of the stakeholders in such meetings. To elevate stakeholders’ confidence, close monitoring of the conduct of virtual meetings is necessary, at least for the initial years. A special unit/body (under the regulators) to handle feedback or complaints from the participants should be considered. Its primary role would be to engage with the companies concerned to assist them in improving their conduct of virtual general meetings. PLCs should be barred from holding online general meetings if there is evidence of abuse until they are ready to observe practices that protect the rights of all shareholders.

It is commendable that most virtual AGMs had their proceedings recorded and uploaded to the companies’ websites. This is not only useful for shareholders who could not attend the meetings but also for other stakeholders to get better information on the companies. It could also be useful for tracking the conduct of the meetings. It would be good if this could be made mandatory for all general meetings.

Shareholders should have the right to request for a physical meeting in the event that there are controversial issues that they believe will be more effectively discussed in this manner.

While traditional physical meetings facilitate the most effective engagement with shareholders, a virtual meeting is seen to be accessible to more shareholders, allowing greater shareholder participation.

To many PLCs, especially companies with a large number of shareholders, virtual meetings mean cost savings and flexibility. However, stakeholders are concerned that virtual meetings may potentially lead to reduced transparency and accountability. Hybrid meetings, which have elements of both physical and online meetings, serve the best of both worlds. However, it may not be the choice of PLCs given the cost and resources involved.

In deciding the mode of their general meetings, PLCs will need to assess the pros and cons of the options, and this will depend not only on cost but also on their relationship with their shareholders and the make-up of their shareholder register. One size does not fit all companies and shareholders.

One approach to help PLCs in selecting the right mode of general meetings is to get feedback from their shareholders. The 4th Edition of the Corporate Governance Guide issued by Bursa Malaysia proposes that a survey form be included in the administration guide of the general meeting to glean feedback from shareholders/proxies on the effectiveness and efficiency in conducting it. Few PLCs have done such a survey on the conduct of their recent AGMs.

Currently, the only form of communication in a virtual meeting is via typed texts. Hopefully, technological advances will make verbal communication possible at PLCs’ general meetings to facilitate robust virtual interaction in future.

Lastly, PLCs holding physical general meetings should broadcast their proceedings live for the benefit of those who are unable to attend them due to the location. This will provide the opportunity for all shareholders to receive the same information at the same time.

Linnert Hoo is former head of Research & Monitoring at the Minority Shareholders Watch Group (MSWG)

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