How difficult can it be to hold an AGM?
These meetings have been a requirement of company life for almost as long as company life has existed. Yes, things have become more complicated and regulation-bound, but that’s a fact of all our lives; we’ve adapted. And yes, over the past four years technology has disrupted the traditional AGM process but, again, where hasn’t technology been a disruptive force?
So, how is it that some companies still struggle to pull off a halfway decent AGM?
“Decent” in this context is fairly straightforward. All that is required is that it should be easy for shareholders to follow proceedings and participate. Even allowing for the new higher-tech format, to cope with the Covid restrictions, it’s not rocket science.
And yet, as the most recent AGM season has demonstrated, a surprising number of listed companies, including some of the largest, are still fumbling. The good news is that the majority of large listed companies aren’t.
For this, thanks may be due to the Companies and Intellectual Property Commission (CIPC), which last year issued a non-binding legal opinion reminding boards how questions should be handled at AGMs. In the intervening 16 months, it does seem most JSE-listed companies have made an effort to ensure shareholders’ questions aren’t mangled by technology or company secretaries.
It’s also likely that companies are responding to the near-constant nagging of shareholder activists such as Just Share. And certainly, many do take seriously the importance of AGMs as a means of communication with stakeholders.
So, full marks to companies such as Absa, Nedbank, Thungela, Investec and Mr Price for producing stand-out performances.
Their meetings were shareholder-friendly, easy to access and easy to follow. Most important, it was easy to ask questions and there was minimal moderation of the question-asking process. Significantly, each of these top performers held hybrid meetings – they offered the option of in-person or electronic attendance. Not offering a hybrid meeting option in 2024 should set off alarm bells.
Clicks, for instance, only offered an in-person meeting, which was unsettlingly old-fashioned, while its competitor Dis-Chem had a remarkably low-tech electronic-only meeting. Dis-Chem’s meeting was in fact an audio-only meeting brightened occasionally with headshots of the top directors.
The best of the companies also made it easy for stakeholders (including those who’re not shareholders, like the media) to attend.
So, what about the really bad performers? The companies that don’t seem to give a toss, and whose executives want us all to know they have much more important things to be doing than spending time, even hours, answering questions lobbed at them by shareholder activists?
Tech trauma?
Rather disappointingly, the “bad performers” list includes some of our top fund managers. How is that possible, you might ask, given that these are the guys we entrust with the management of our savings and pensions?
Yet since 2020, PSG, Coronation and Ninety One have produced eye-poppingly bad performances, evidently believing the best use for new technology was to curb pesky shareholders from asking questions.
Remember four years ago when PSG chair Chris Otto shut down questions and closed the AGM to the sound of dogs barking in the background? Or when Coronation’s board refused to answer any questions about the company’s investments because it was outside its area of authority.
And then there’s Ninety One. It’s difficult to know how to describe the appalling show Ninety One has put on each year since its listing in 2020 but “Australian Olympic breakdancer” comes close.
Indeed, for the South African shareholders it’s actually not a show; they only have audio access to the mumblings of various board members. The UK shareholders have the option of an in-person meeting. A few years ago, Ninety One prohibited the media from attending, but subsequently said this was due to a misunderstanding.
Things got so bad this year that the meeting closed without any of the shareholders’ questions being addressed at all. As a result, Just Share took the unprecedented step of asking the CIPC to investigate whether Ninety One had contravened the Companies Act.
In its letter to the CIPC, Just Share claims Ninety One failed to ensure all matters raised by shareholders could be addressed; failed to ensure the AGM was reasonably accessible for electronic participation; and “failed to ensure that the electronic communication employed enabled all persons participating in the AGM to communicate concurrently with each other without an intermediary, and to participate reasonably effectively in the meeting”.
Ninety One CEO Hendrik du Toit says it wasn’t the company’s fault, however. “The failure lay with our platform provider Lumi,” Du Toit tells Currency.
“Because of its own staff members’ error, Lumi did not alert us to the fact that there were shareholder questions, even though we made extra time to take questions. We became aware there was a problem only after the AGM had ended. Lumi subsequently accepted responsibility and apologised.”
Just Share isn’t persuaded. Senior governance analyst Greer Blizzard says the entire meeting was rushed, not just the Q&A section.
“The AGM of a significant dual-listed company only lasting 11 minutes is truly perplexing and raises questions about the company’s approach to shareholder engagement and governance practices,” Blizzard tells Currency.
Du Toit is adamant Ninety One makes every effort to communicate openly and professionally with its shareholders and stakeholders. “It’s not in our interests to do otherwise. Our shareholders are our owners,” he says.
Lumi doesn’t dispute it was the cause of the missing questions. But MD Andrej Vladar assures Currency the problem was due to human error on Lumi’s part “not the technology or platform”.
As for the CIPC, its senior legal adviser Lucinda Steenkamp tells Currency the issue is being dealt with by CIPC investigators and the commission “cannot comment at this point”. However, subsequently the CIPC issued a notice saying it declined to investigate Just Share’s complaint because the complaint did not “allege any facts which, if proven, would constitute grounds for a remedy under the Companies Act, 2008”.
It seems the CIPC was satisfied that Ninety One had answered the questions – even if it was in writing long after the AGM had closed. “This is disappointing because, as we made clear in our complaint, being able to engage with the board in real time is the crux of the AGM, and Ninety One’s AGM denied shareholders the ability to do so,” Blizzard says.
She describes it as a missed opportunity for the CIPC to provide clarity in an area that has caused and continues to cause frustration for shareholders where companies conduct electronic and hybrid AGMs. “While the benefit of electronic AGMs is clear, including making the meetings more accessible, the risks around technical issues are very real. Technical issues cannot be used as a reason for non-compliance with basic shareholder rights,” she says.
Ensuring corporate accountability
Currency reckons the AGM is a vital part of the corporate landscape, but it is one dealt with far too lightly by many companies and institutional shareholders. So, on behalf of all those indirect shareholders – all of us savers, and members of pension and provident funds – Currency plans to keep closer tabs on AGMs, ranking each according to a variety of criteria.
This will include: ease of accessibility, availability of in-person as well as electronic access, quality of presentation, and a fluid Q&A process allowing for unmoderated and unrestricted questions that are adequately answered.
Additional points will be awarded to those that make the minutes of the meeting (not merely the results of resolutions) available on the company’s website and bonus points to those who provide for guests, including the media.