It’s time the JSE stepped in and enforced some basic requirements on the format and reporting of post-Covid AGMs.
Access to the meetings for guests and shareholders needs to be made more straightforward, and shouldn’t involve an hours-long search for clues through a dense website. There also needs to be clarity on what comprises “minutes” of a meeting. And, most urgently, companies must allow verbal questions.
AGMs are, after all, the one occasion in the year when shareholders get the opportunity to engage with the companies they are invested in.
Well, actually that’s not entirely true, is it? As our large fund managers like to continually remind us, they have ongoing access to corporate executives. These powerful fund managers, whose power derives from our money, are able to engage with corporate executives behind closed doors.
With a few rare exceptions, such as Aeon Investment Management, institutional investors don’t want to be seen challenging corporate executives and possibly causing them some embarrassment. And because they are allowed to engage privately, despite supposedly tight regulations on “insider trading”, they almost never bother to attend AGMs. All they do is e-mail their votes on the resolutions.
Even if they’ve voted against the “remuneration implementation” resolution and should engage with the remuneration committee when it fails to make the 75% mark, they don’t bother.
Even if they describe themselves as engaged shareholders, they don’t bother.
Perhaps it’s for that reason that the JSE has essentially allowed the post-Covid AGM to fall into disrepair. After an initial, and unsurprising, panicked response, the corporate world quickly adapted to the challenges posed by Covid lockdown restrictions. Some have created additional opportunities for engagement, others have stymied it.
Anglo American’s initial response was laughable. Shareholders weren’t given even electronic access to the meeting; they were told to send questions to the board and these would be answered and made available the day after the AGM. It wasn’t entirely Anglo’s fault, because UK company law had restrictions on hybrid meetings. And it didn’t help that Anglo’s AGM was one of the first lockdown meetings.
Any director worth their salt, not to mention hefty fees, should have no qualms about being able to deal publicly with robust questioning
Two years later, Anglo provided a considerably improved affair. It was easily accessible to shareholders across the globe, and questions were entertained in written and spoken formats. If the Anglo directors regretted the openness of the meeting, they didn’t show it even as it dragged on for three hours amid tough questioning by shareholder activists.
Anglo’s is what a 21st-century AGM should be and any director worth their salt, not to mention hefty fees, should have no qualms about being able to deal publicly with robust questioning.
Unfortunately, it seems many directors do suffer such qualms. It’s particularly worrying that many of these directors are on the boards of our large banks. In recent weeks, Standard Bank and Absa refused to allow shareholders to ask questions verbally. Instead, in what seems a direct contravention of the Companies Act, shareholders were forced to send questions to the banks’ company secretaries, who then read them out at the meeting.
This inevitably requires the company secretary to be a good public speaker; they generally aren’t, so the questions get mauled. Frequently the company secretary decides not to ask a question on the grounds that the matter has already been addressed.
What legal advice did they get to somehow prove this was in line with the Companies Act? The act requires that “all persons participating in a meeting” are able to communicate concurrently with each other without an intermediary.
How are our big banks getting away with it? Nedbank shareholders were able to ask questions verbally if they used the telephone. None did, so questions were ready out.
How will they cope when in-person or hybrid AGMs become the order of the day? Full marks to Capitec Bank, which sailed through a hybrid AGM just hours after Nedbank’s sterile, intermediated affair.
Old Mutual has been exemplary from day one. In May 2020, amid a high-profile legal battle with former CEO Peter Moyo, it must have been tempting to prohibit verbal questions. Instead, a skilled board used the engagement opportunity to tell its version of events.
It’s certainly not a question of size; in recent weeks many smaller listed companies such as Spar, the JSE and Mpact have demonstrated the benefits of allowing written and verbal questions.
As for “minutes” of a meeting, surprisingly few companies are doing the obvious and providing a link to a recording of the meeting; most pursue the 20th-century option and merely provide the results of voting on the resolutions. Nedbank’s more comprehensive but intermediated minutes made me wonder if it was the same meeting I’d attended.
It’s not about rocket science, it’s about good housekeeping.
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