Virtual AGMs on extended run but challenges remain
With companies now given the green light to hold online meetings for the foreseeable future, service providers are eager to meet that demand.
As the Covid-19 pandemic disrupted business operations for the better part of 2020, annual general meetings (AGMs) were among the many activities forced to move online.
And now, for the second straight year, many shareholders of listed companies find themselves having to attend an AGM virtually as part of the new normal.
On Tuesday, companies learned that AGMs and shareholder meetings could continue to be conducted online beyond the stipulated June 30, 2021 deadline.
The Law Ministry extended the legislation, allowing for alternative arrangements for these meetings indefinitely, with the new rules in place until they are revoked or amended.
Although sentiments around the relatively new virtual AGM concept have been mixed, service providers here say they are prepared to deal with this year's greater demand.
Production company Motion Media Works has so far been contracted by about 50 companies to host their virtual AGMs this year, compared to the same number for the whole of last year.
As the financial year draws to a close for more companies, producer Lionel Low expects demand to continue to grow.
Another player in this business is Hong Bao Media, which specialises in media training, but which has diversified in recent years to offer live streaming services to its clients. Dozens of companies used its virtual AGM services last year.
This year, all those AGM clients have returned, and new clients have also come on board, "learning from the mistakes they made last year", said Mark Laudi, the company's chief executive.
Last year, video production services company Will Dylan was met with a sudden fall in demand for its corporate video work. But jobs were there for the taking in virtual AGM services, so the company took on the challenge.
Owner Dylan Tan said that the company took on about 40 virtual AGMs last year. This year, careful not to bite off more than it can chew, it has accepted a similar number of jobs.
Unified communications company NTT Cloud Communications (CC) has not repeated the 200 per cent jump in revenue from virtual AGMs it handled last year from 2019, but it has nonetheless recorded a 40 to 50 per cent uptick in revenue from virtual AGMs year on year, said Sean Kwek, its managing director for the Asia-Pacific.
Virtual AGMs run the gamut from audio-only to full studio experiences, depending on the companies' areas of expertise and customer preferences.
All four companies that The Business Times spoke to have adapted their traditional businesses to accommodate completely virtual AGMs.
NTT CC had been providing supplementary phone dial-in services at AGMs even before they went fully virtual.
Now, as all AGMs have moved online, a significant portion of these meetings occur solely over a telephone network, though they do offer alternative channels such as live streams. Clients usually present from the comfort of their own boardrooms, where a crew deployed by NTT CC handles the technical aspects.
At both Hong Bao Media and Will Dylan, top executives have the option of streaming from in-house studios, where a professional set up can maximise the quality of their streams.
Other directors choose to dial-in remotely.
Will Dylan has leaned on its video production background and its experience with live-streaming physical events such as town halls and keynote speeches, Mr Tan said.
Hong Bao Media recently launched Investor.Exchange, a self-service portal for companies to manage registration, provide details and link to the webcast.
Partnering with webcast hosting platforms such as Intrado, On24 and Wowza, these companies gather and channel live feeds from multiple cameras to these content delivery networks, some of which can simulate the format of a physical AGM, with multiple features offered on a landing page, to broadcast these streams.
Motion Media Works has had decades of experience with connecting businesses and shareholders gathered in physically separate locations together virtually.
"Nobody used to call it a hybrid event," said Motion Media Works' Mr Low. "This is pretty much the same thing."
Cautious of sensitive information, the company does everything in-house, handling processes from registration to broadcasting on its own platform.
The cost of running a virtual AGM varies based on stream quality and the supplementary services taken up.
An hour-long live-stream for a panel of eight directors and beamed to a thousand shareholders would cost in the ballpark of S$7,000 to S$10,000, said NTT CC. Hong Bao Media, meanwhile, cited a fee of between S$8,000 and S$14,000, which includes the use of a studio.
All four companies agree, however, that extensive rehearsals and technical runs are necessary to ensure that virtual AGMs go off smoothly.
Elements like lighting, audio and framing are especially important if executives and directors are dialling in remotely.
NTT CC has contingencies in place to switch to an audio-only format if live streaming is disrupted.
In its studio, Will Dylan ensures that it has back-up service providers for its Internet connection.
Both companies also said that preparation is necessary to prevent incidents like firewalls preventing access to the stream.
And despite the different formats of virtual AGMs offered, these four companies have identified multiple similar issues.
A common challenge lies in keeping shareholders engaged, given the static format of virtual meetings. AGMs have become shorter affairs as a result.
Will Dylan uses two monitors in their studio - one for live feeds of the directors, and another for the teleprompter, which presenters must manage concurrently.
In an effort to partially offset the problem, it is experimenting with the use of Unreal Engine, a 3D creation platform commonly used in gaming and becoming popular in film production, which makes virtual AGMs more visually appealing.
Another challenge is that many clients opt for audio-based AGMs because they are uncomfortable with being on camera, said NTT CC's Mr Kwek.
Mr Laudi, with his background in media training, hopes to address this, and bust the myth that Singapore lacks eloquent speakers. Since 2018, Hong Bao Media given out awards to honour those it regards as having "excellent interview skills on various media platforms".
While all these companies have the technology necessary to include interactive elements such as live question-and-answer segments and weighted polling in the AGMs, they have found these features under-used in some cases.
Managing customer expectations has also been a learning curve, said Motion Media Works' Mr Low. For example, some clients expect set-ups similar to those for physical events, with everything including a stage and even flowers to decorate the set.
Future of AGMs
As virtual events establish themselves as the norm, the competition to provide such services to organise them has also increased.
"A lot of companies are jumping on the bandwagon," Mr Kwek said. "We are seeing some cannibalisation of our market share."
In many cases, the companies offering virtual AGM services are traditionally part of physical AGMs, like marketing companies, which now have diminished roles, he added. Mr Tan said that hotels, for example, have also begun to offer virtual AGM services.
On the whole, listed companies and shareholders alike have largely recognised the convenience and efficiency of virtual AGMs.
Mr Kwek suggests that they are also likely to be more cost-effective over time, as there is no need to cater food or book a venue, say, a function room in a hotel.
Regardless, the service providers expect that virtual events are here to stay, although likely in a hybrid format. Companies will then have to adjust to make sure that they are prepared to make these mixed-format events successful.
Mr Kwek predicts that expectations for the virtual meetings will increase. In the past, on-site events were the primary focus, and the virtual element was organised mainly for those who were unable to attend.
"Now, the demand is that the online experience has to be just as good as an on-site one," he said.
AGMs: virtual, but not unilateral, please
For many investors, 2020 could be considered the year of the annual general lecture, rather than the annual general meeting (AGM) - as most companies chose to talk at, rather than with, their shareholders.
The Singapore Report on Shareholder Meetings: The Rise of Virtual Meetings out last week showed how investors were kept at an unhealthy distance, with most companies failing to actively engage their shareholders on virtual platforms.
And, while one could argue that companies could be excused for being ill-prepared last year - the onslaught of the pandemic caught just about everyone off-guard - it's going to be much tougher to make that same case this year; companies have since been given ample opportunity to offer a more dynamic experience and their failure to do so will say much about their intentions.
From a distance
The Singapore Report on Shareholder Meetings covered all Singapore-listed companies that held at least one general meeting between 2017 and 2020. It said there were 630 listed companies that held at least one meeting last year, making for a total of 744 meetings (of which, 623 were AGMs, and 121 were extraordinary general meetings or EGMs); of these, 682 meetings were conducted virtually.
But less than 1 per cent of the 630 companies - a grand total of just six, to be exact - held virtual AGMs with a "live" question-and-answer (Q&A) session; the other 581 opted for a web/audio-cast of the meetings without a "live" Q&A.
And only one company (of the six) - Azeus Systems, which is, no-tably, a provider of IT consultancy services such as those that help companies hold virtual meetings - held an AGM that had both a "live" Q&A and "live" electronic voting.
This means that, in 2020, the shareholders of over 99 per cent of listed companies here could not interact with and/or talk to the board of directors, key personnel and other shareholders during the meetings.
It wasn't totally a one-way street in that shareholders were allowed to ask questions before the meetings - regulators have mandated that issuers give their shareholders the opportunity to ask questions within a reasonable time period prior to the commencement of the meeting. All substantial and relevant questions, and subsequent clarifications and follow-up questions, were to be addressed prior to or at the meeting.
But because most companies chose to omit the option of a "live" Q&A at their meetings, it meant that their shareholders were relegated to a passive role during the meeting, merely able to listen to what the company chose to answer or deal with, but unable to ask further questions, to push for greater clarity, certainty or accountability.
We don't talk anymore
The immediate consequence of such a unilateral encounter can be seen in some of the meeting times covered in the report: likely the re-sult of a lack of interaction between both sides, 263 AGMs last year were under 20 minutes long. Two companies held AGMs that were just seven minutes long, and another six had meetings that lasted just eight minutes.
As Mak Yuen Teen, an associate professor of accounting at the NUS Business School, who authored the report, had quipped: "For some AGMs, the directors wouldn't have been able to finish singing American Pie by the time the meeting ended."
Still, all jokes aside, it's clear that this worrying development needs to be arrested. If companies are allowed to continue conducting meetings in such a fashion, that would have a debilitating effect on our markets: issuers will end up being markedly less accountable for their actions, raising the risk of poor decisions being pushed through; shareholders will become disenfranchised, potential investors will be turned off, and the levels of shareholder participation, engagement and activism - already far from ideal levels here - will dive.
Singapore regulators have stepped forward to issue updated guidance on the conduct of virtual meetings, which now encourage issuers "to adopt enhanced digital tools at their general meetings, such as allowing for real-time remote electronic voting and real-time electronic communication".
They ought to go one step further and make this a mandatory requirement - the technology exists and is readily available, after all. With many companies already regrouping after the initial onslaught of the pandemic, it is time for the Singapore market to work on restoring the rights of shareholders, and to focus our efforts on continued progress in this area.
It is also important for the market to note that electronic online voting is already commonplace in many markets and compulsory in key markets such as China, Taiwan and India; keeping pace with such international developments ought to be a serious consideration.
A whole new world
It should be acknowledged that there are those who feel such an investment is unnecessary at a time when a return to physical meetings in the near future - as pandemic control measures ease - appears likely.
One, it is important to realise that technology in this form - through the use of electronic voting - can be used to enhance and develop shareholder participation whether meetings are physical or virtual; two, hybrid meetings - a blend of the virtual and physical - could be the way to go, even in a post-pandemic world.
Electronic voting can broaden the base of shareholder participation, in general, and attract more of the younger, tech-savvy generation of voters, in particular. And help can be provided to those who have difficulty understanding some of these processes.
Hybrid meetings have their advantages, when conducted well and on appropriate occasions: by giving shareholders the option to join these meetings virtually, it cuts down their travelling and allows them to attend more meetings, and permits those who are unwell or lack mobility to still take part.
An online survey of 186 retail investors, included in the report, showed a clear preference for hybrid meetings. When asked how companies ought to conduct shareholder meetings in a post-pandemic environment, 69 per cent of respondents said they prefer hybrid meetings, compared to 28 per cent who want face-to-face meetings and 3 per cent who prefer virtual-only meetings.
For this year, at least, it looks like virtual meetings are here to stay. One hopes that companies will have learned from last year's experience, and do right by their shareholders this year by offering them a more interactive encounter that will preserve their rights, instead of just aiming for the lowest hanging fruit.
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.