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Voting before getting answers: the farcical way shareholders' meetings are conducted now: Opinion

Voting before getting answers: the farcical way shareholders' meetings are conducted now: Opinion

Source: Business Times
Article Date: 22 Sep 2021
Author: Michelle Quah

Singapore's regulators need to take a firm stand on this issue, and consider mandating the use of live voting at all virtual AGMs and EGMs to ensure that shareholders' rights are safeguarded and that the spirit behind such meetings is upheld.

As the pandemic intensifies and companies continue to be compelled to hold their shareholder meetings virtually, a truly ludicrous situation has developed here in Singapore: shareholders are now casting their votes on important issues days before hearing the answers to their questions from the company's board and management.

It is a situation that cannot be allowed to persist, not least because of how it robs a shareholder of his rights, and especially when the technology exists - in the form of secure, live voting - for companies to field questions before votes are cast.

Singapore's regulators need to take a firm stand on this issue, and consider mandating the use of live voting at all virtual annual general meetings (AGMs) and extraordinary general meetings (EGMs) to ensure that shareholders' rights are safeguarded and that the spirit behind such meetings is upheld.

Back in April 2020, Singapore passed laws allowing registered societies and companies to conduct AGMs virtually, as these were not able to gather stakeholders together physically due to safe-distancing measures - and technology proved to be a boon in this respect.

But, while the technology was also available for companies to include live question-and-answer (Q&A) sessions and live voting on meeting resolutions, the grand majority of listed companies here chose to exclude them from their AGMs and EGMs.

In his study, "The Singapore Report on Shareholder Meetings: The Rise of Virtual Meetings", NUS Business School professor of accounting Mak Yuen Teen found that only one of the 581 issuers that held virtual meetings in 2020 had live Q&A and live voting.

The vast majority of meetings were conducted using webcasts, which limited interaction.

"Social distancing became investor distancing at shareholder meetings," Prof Mak said.

That one company whose AGM had all the live elements was Azeus Systems, a provider of IT consultancy services such as those that help companies hold virtual meetings.

In an interview with The Business Times in April this year, its business development and partnerships manager Yap Jia Rern said more companies have chosen to take up live Q&A and live voting this year, "though our observation is that listed entities are still more keen to embrace them progressively - in other words, many will take up the live Q&A this year, and then live Q&A and live voting next year".

But the change hasn't been significant.

Azeus Systems - and its client, wealth management fintech platform iFAST Corporation - showed that the technology is available for those who wish to harness it. In their AGMs this year, they incorporated all the live elements they could, such as allowing the appointment of third-party proxies (other than the chairman), two-way live Q&A (textual and video), and live voting (remote and for on-site shareholders).

Asking questions

Why are such live elements important? Other than allowing shareholders to interact with the company's board and management in real time, which improves the engagement, they also give shareholders the opportunity to ask questions about issues or resolutions they need further clarity on or have concerns about and to hear the board and management's response before they vote on such issues - which is how shareholder meetings used to be conducted, before the pandemic.

But now, the vast majority of companies do not include live voting in their meetings, and have their shareholders cast their votes on meeting resolutions before the meeting itself, when questions would be fielded.

David Gerald, president and CEO of investor rights group, the Securities Investors Association (Singapore), bemoaned this situation in a commentary on Sept 9.

"Currently, shareholders have to submit questions in advance, which means that online meetings lack the spontaneity of face-to-face encounters. Companies are now able to pick questions that they wish to answer... There is also no avenue for follow-up questions once the answers are articulated, so shareholders may end up with boilerplate responses that do not really address the issues contained in the original questions."

He noted that companies have chosen not to opt for the live Q&A option offered by "a major provider of online AGM services" even though there is no additional cost.

"Live voting on resolutions should be made compulsory," he added. "This is because the present arrangement of submitting votes before AGMs means shareholders are being asked to agree or disagree with proposals before any questions they may have had have been answered. From a governance standpoint, this does not make sense and is something that has to be addressed."

Prof Mak has been similarly unhappy, saying in a blog post on Sept 11 on his personal website: "I fail to understand why, in a physical meeting, a shareholder can appoint any proxy but, in most virtual meetings here, they must appoint the chairman. Our rules are so lop-sided in favour of companies and management (and) this is far from the only instance where investor rights and protection appear secondary."

In a separate blog post, Prof Mak also cited a July 1 statement from the Corporate Governance Advisory Committee - which he is part of - which said: "Live remote voting is especially important for shareholder participation when complex matters are being tabled. In such situations, shareholders may need to consider all the information provided up till and even during the meeting, before casting their vote."

A practice guidance issued by the Monetary Authority of Singapore, also on July 1, said: "Companies should consider other avenues of engaging shareholders, such as through town hall meetings, briefings and roadshows, or webcasting meetings and allowing electronic online voting of shares."

Improved solutions

There is also little excuse for the current situation - where live voting is not available at many AGMs and EGMs, and shareholders have to cast their vote before they can fully engage with the board and management at such meetings - to persist, when better options are readily available, and at "no additional cost", as Mr Gerald has pointed out.

In fact, improved solutions continue to be offered. Azeus Systems on Sept 20 launched ConveneAGM, which it calls "a game-changer in the Singapore market".

The platform encompasses knowledge retention, as past meeting records are kept - which simplifies future meeting preparation - and allows shareholders to participate fully through various live elements. It is said to be the only virtual meeting platform that allows shareholders to log into meetings using their Singpass, and offers real-time webcasting.

This puts paid to the argument that security concerns over the live voting process is a valid excuse for companies to not incorporate it into their shareholder meetings.

As Ms Yap explains, "(It) allows users to use Singpass to log into their ConveneAGM account directly with their Singpass account... An established and secure authentication gateway is used... it definitely improves security for companies concerned about this."

Non-Singpass users will have to create their own passwords on the platform (which Ms Yap says is more secure than being provided a password via email), and these passwords are encrypted, with Azeus Systems having no access to them even as a system provider.

It truly is time for Singapore's regulators to take a firm stand on this issue; we have learned enough from the experiences of the past year and a half, to know how AGMs and EGMs - which look set to stay in a virtual or hybrid mode for quite a while more - can and ought to be conducted.

Regulators will have to determine if they are satisfied with many companies choosing to hurdle just the lowest bar, or if they need to step up and push them to vault higher.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.


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