Date: 15th December 2020

The annual general meeting of shareholders (AGM) is the cornerstone for sound corporate governance. It is through the shareholders' vote at the AGM that board members' actions get legitimacy and validity. However, it is not only voting that takes place at an AGM. The shareholders' meeting is the only place where directors must report to shareholders on their management and their performance and answer questions. It is also a body where shareholders can exchange directly with each other and board members, form an opinion on all matters to be decided upon, give feedback advice on key business decisions, and hold board members to account. For private, non-professional shareholders it is very often the only opportunity to engage with managers, auditors, or members of the supervisory body.

The Covid-19 pandemic has had a significant impact on the general meeting season 2020 throughout Europe. In almost all countries, gatherings of people and the freedom of movement had been temporarily restricted. Holding a general meeting on-site under these conditions was impossible in most jurisdictions. Governments in several member states, therefore, decided to relax existing rules governing the participation in general meetings – regularly by way of emergency acts – allowing companies to hold their general meeting purely virtual, provided certain conditions were met. This has led to an unprecedented rise in virtual meetings across the EU.

Emergency laws in several member states prohibited general meetings with physical attendance and reduced in one way or the other shareholders' rights to speak and ask questions as well as the right to vote based on appropriate information.

A survey conducted among shareholders and their representative organisations throughout the EU shows that the owners of listed companies see both advantages and weaknesses in the traditional on-site meeting and the virtual-only meeting. While on-site meetings are not easily accessible for non-residents, involve costs and are time-consuming, they give especially private, non-professional shareholders a unique opportunity to be "eye to eye" with the management and interact very directly with both management and other shareholders. On top, they are very transparent: questions asked by shareholders and the board's answers are being heard by everyone in the room.

Virtual-only meetings, on the other hand, can be accessed from everywhere in the world and with a lower environmental impact, they are less costly and time consuming for shareholders and can be watched at any time, if recorded. However, virtual-only meetings are not accessible for people without internet access or poor IT skills and impact especially on the communication aspect which results in an essential part of the meeting, namely the discussion and discourse, getting lost.

From a shareholder's perspective, a hybrid general meeting model should, therefore serve as the future model for EU listed companies as it can combine the best of both worlds. To that end, such a model needs to become attractive both for shareholders and companies, which means that the weaknesses need to be addressed.