By Mak Yuen Teen

The Business Times editorial on 6 April 2023 “Hybrid AGMs should continue, even post-pandemic” makes a number of compelling arguments as to why companies should hold hybrid AGMs.

It said: “A hybrid meeting removes none of the advantages of a physical meeting, while adding the benefits of a virtual one. In-person interaction is still possible, while the digital option broadens the reach of the AGM – not just numerically, but potentially to new attendees as well. Some shareholders may not be quite invested enough to make it down in person, but might be willing to follow an online livestream – and could perhaps gain greater insights into the company. More importantly, the digital option enables even shareholders who are based abroad, as well as those with mobility or other accessibility issues, to attend. Hybrid AGMs hence allow more minority shareholders to participate – and thus to band together for a stronger voice.”

A Business Times article on 5 April 2023 stated that in-person AGMs are now the preferred format for STI constituents. Of the 21 STI companies with a December year end, 14 of the 18 with AGMs due by the end of April and whose formats are known as at 3 April, have chosen a physical meeting.

In December 2022, SGX Regco announced that listed issuers that conduct general meetings from 1 July 2023 will have to the return to the physical mode. Between mandating a physical mode or a virtual mode, I believe that SGX Regco is correct in choosing the physical mode. But SGX Regco has never said that listed issuers cannot hold hybrid meetings. It is disappointing that so many of the listed issuers are deciding to hold physical-only meetings.

Among them is DBS Group Holdings, the largest issuer by market cap, which held its AGM on 31 March 2023. Even as the bank continues to leverage on technology and encourages its customers to do banking virtually – and has reduced the number of physical branches over the years – it decided that a physical-only meeting was the best option when it comes to shareholders. As the BT editorial states, a hybrid meeting removes none of the advantages of a physical meeting, while adding the benefits of a virtual one. DBS would surely not want to encourage its customers to return to physical-only banking.

Many of the STI companies, including DBS, have global investors. And with so many local shareholders, some are likely to have mobility or accessibility issues. Again, quoting the BT editorial, “ the digital option enables even shareholders who are based abroad, as well as those with mobility or other accessibility issues, to attend.”

It is disappointing that a company like DBS encourages its customers to use technology for banking services but does not leverage on technology to engage with its diverse shareholder base.

One could question whether issuers that hold physical-only meetings are complying with the Code of Corporate Governance 2018. In particular, under “Shareholder Rights and Conduct of General Meetings”, Principle 11 states: “The company treats all shareholders fairly and equitably in order to enable them to exercise shareholders’ rights and have the opportunity to communicate their views on matters affecting the company. The company gives shareholders a balanced and understandable assessment of its performance, position and prospects.” Principles in the Code are now mandatory.

Provision 11.1 states: “The company provides shareholders with the opportunity to participate effectively in and vote at general meetings of shareholders and informs them of the rules governing general meetings of shareholders.”

Can an issuer that chooses not to leverage on technology to allow its shareholders who face limitations in attending physical-only meetings, be said to have complied with Principle 11 and Provision 11.1?

I would argue that, under the listing rules, such issuers should minimally have to explain how a physical-only meeting can still be considered to have allowed its overseas-based shareholders and those with accessibility or other mobility issues to participate effectively in general meetings, and exercise their rights as shareholders to attend general meetings – when the technology is widely available and used by many other international companies.

Principle 12 of the Code under “Engagement with Shareholders” states: “The company communicates regularly with its shareholders and facilitates the participation of shareholders during general meetings and other dialogues to allow shareholders to communicate their views on various matters affecting the company.”

Again, can an issuer which chooses not to leverage on technology to engage with shareholders who face difficulties in attending physical-only meetings, be said to have facilitated the participation of shareholders during general meetings?

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The author is a professor of accounting who specialises in corporate governance, and a corporate governance advocate. The views in this article are his personal views.