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AGM innovation

23 August 2016 by Stuart Ellen

AGM innovation - read more

The first fully electronic AGM has been completed, driven by the aim to increase shareholder engagement

There is an appetite among UK shareholders for a higher level of digital interaction with the companies they invest in. This is evidenced by research from Equiniti completed this year, highlighting the importance of engagement with shareholders. More than 5,000 shareholders were surveyed and the key findings are:

  • 76% think companies should do more to encourage shareholder engagement
  • 44% would be more inclined to attend an electronic Annual General Meeting (AGM)
  • 22% do not attend AGMs but would like to in the future.

These statistics demonstrate that there is a desire for increased engagement and that shareholders want companies to take the initiative to satisfy that.

In late 2015, Jimmy Choo (JC) and Equiniti worked together on a fundamental review of how JC manages its AGM, with its vision being a fully electronic AGM. This event was a UK corporate governance first.

Investor approval

Good governance was a key driver for the project so the company first sought permission from its shareholders to carry out an electronic AGM. Before Equiniti began work on the practical aspects, a special resolution to adopt new Articles of Association at the 2015 AGM was proposed and it received support from 100% of the votes.

One of the biggest challenges was that this had never been done before, so Equiniti was starting from a completely blank page. JC’s legal team was a key stakeholder and helped to define and refine the requirements, which shaped development of the solution.

The two key elements to achieving the outcome were a close collaborative working relationship between JC and Equiniti and a strong project management methodology to manage risk.

Developing an app

The solution design had to mirror all the requirements of a physical AGM but in electronic form; attendance, presentations, Q&A and voting. It had to be simple to use, considering the experience of the end user.

Through the scoping work, it became clear that the end result would be the development of an application for shareholder verification and voting, coupled with the use of telephones for participation. Once the solution was developed, a thorough testing process was undertaken.

Extensive rehearsals took place to establish exactly how this would work in practical terms and at the live event. This set a high level of confidence among everyone involved in delivering the AGM.

A key contributor to the process was Lumi; Equiniti’s partner in delivering AGM technology solutions.

An AGM mobile application was created as a native app (Android and iOS). The app directly integrates with the AGM software to allow shareholders to submit questions and vote on the resolutions being put to the meeting.

To access the app, a shareholder is required to enter a unique meeting code known as the ‘Meeting ID’ followed by their log-in credentials. These are provided in advance, at the point of issuing the Notice of Meeting and associated voting materials. These credentials are held on a secure, authentication server that connects to the meeting database via an online voting platform. A shareholder is not permitted to enter the ‘virtual meeting’ if their credentials cannot be verified.

The benefits

JC’s most pertinent aim was to achieve an increase in investor access to its AGM and to give all investors the opportunity to participate regardless of location − something a lot of companies strive toward. JC felt fully digitising the process would facilitate this.

A reduced carbon footprint is a concern for responsible investors and company boards. An additional but no less important benefit of a fully electronic AGM is that shareholders and board members no longer have to travel to a physical location.

Better attendance

The AGM was much better attended than JC’s first physical AGM in 2015, an indication of the greater appeal and accessibility of an electronic AGM. There was also the added bonus of no known issues or negative feedback from shareholders.

Peter Harf, Chairman of Jimmy Choo plc, said: ‘We are very pleased with the outcome of this process, which achieved its aim of broadening shareholder access to our AGM in the most convenient way possible. This was in good part due to our registrars and their innovative approach to modernising the traditional AGM.’

The future of AGMs

Technology often defines how the world changes and how our habits change. This is encapsulated by Equiniti’s CEO, Guy Wakeley: ‘It’s fantastic to be credited with not only a significant step forward in the use of technology but also a watershed moment for the standards of UK corporate governance. Use of this technology will not only lighten the burden on companies but also improve engagement with shareholders by making AGMs more accessible.’

Following the AGM, there has been a lot of interest from other companies looking at how and when they can potentially introduce similar changes to their own meeting management. It will be interesting to see the pace at which UK PLCs embrace the extended choice they now have to run their AGMs. Whether it is following JC’s lead or utilising a hybrid version, offering both a physical and online meeting as a stepping stone to making the move to a fully electronic AGM.

UK plcs considering a revised approach to their AGM should consider the following:

  1. Start the process early
  2. Ensure executive sponsorship
  3. Undertake research − a review of the Articles of Association, analysis of the share register etc.
  4. Set clear objectives
  5. Define internal and external teams − appoint leaders and advisers to the project
  6. Frequent project team engagement − test and learn, rehearse and implement

Stuart Ellen is Managing Director, Registration Services, at Equiniti

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