After the 2023 AGM season and looking ahead to the 2024 season, BETTER FINANCE and its member organisations voice concerns about the erosion of shareholder rights. Inadequate rules for Virtual Annual General Meetings (AGMs) in some Member States highlight the need for broader engagement and representation frameworks for investors to truly benefit from digitalisation.
The AGMs Pillars and Impact of Covid-19
AGMs are the cornerstone of shareholder democracy and a vital component of corporate governance in listed companies. These meetings are the sole legally binding platform for shareholders – as co-owners – to voice their opinions on a company’s policies and decisions, notably on ESG matters. At AGMs, individual investors have the unique opportunity to interact directly with their peers and with the management. Back during the Covid-19 pandemic, BETTER FINANCE & DSW already voiced concerns about the erosion of shareholder rights. The emergency rules affected AGM practices across the EU, leading to closed-door meetings, exclusively virtual AGMs, or even restrictions allowing only proxy representation. These changes adversely affected shareholder engagement.
Virtual Shifts: Impact on EU Shareholder Rights
In the 2023 post-pandemic AGM season, many EU companies once again opted for virtual-only AGMs, invoking cost and convenience. This shift brought to light varying AGM practices, exposing structural issues affecting shareholder rights in many Member States, including limitations on voting, motions, and Q&A sessions. Instances of mere broadcasting (without interacting capabilities), technical glitches, and forms of digital exclusions resulted in reduced attendance, eroding patterns of shareholder relations. Similar problems were noted in some hybrid AGMs, where the imbalance between in-person versus virtual participation arrangements exposed uneven rights among shareholders.
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