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Law360, London (October 6, 2020, 2:08 PM BST) -- The Financial Reporting Council has urged businesses to ensure that shareholders can fully participate in virtual annual general meetings, amid concerns that individual shareholders could become disenfranchised if fully digital events replace traditional gatherings.
Many companies have had to radically shift the way they carry out their AGMs because of the COVID-19 pandemic, moving from holding physical meetings in conference halls to events held online, according to a review by the accounting regulator.
The FRC has raised concerns that COVID-19 restrictions would make it difficult for bosses to meet statutory obligations to hold yearly meetings. Businesses must ensure that shareholders will also be able to vote after presentations by a company's board, the watchdog said.
"While most have adapted remarkably well, it is disappointing that some companies have not provided for meaningful input from shareholders, in particular retail shareholders," David Styles, director of corporate governance at the regulator, said.
The watchdog conducted a review which looked at how businesses conducted AGMs in the first half of this year. The regulator, which examined a sample of annual general meetings at just over 200 companies listed on the FTSE 350 exchange, also considered whether the approaches they had taken were in the best interest of the shareholders.
According to the study, nearly 82% of the 163 companies that held closed meetings had made arrangements to accommodate questions and answers between shareholders and their board, while 60% of the 30 companies that held open meetings had live voting capabilities.
Thirty businesses appeared to not have made plans for shareholders to ask questions to the board before or during the AGM.
"This is disappointing, and has led to concerns that any move to fully digital meetings could disenfranchise retail shareholders," the FRC said.
Holding AGMs online is just one of the many adjustments businesses have had to make as they adjust to the pandemic. Regulators have also relaxed some rules.
The FRC, with the Bank of England and Financial Conduct Authority, set out measures in March to ease corporate reporting rules for businesses.
--Additional reporting by Joanne Faulkner and Najiyya Budaly. Editing by Ed Harris.
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