NewsBite

Online AGMs ‘restrict access’ and limit transparency: ISS

Influential proxy adviser ISS has added its voice to the chorus of investor criticism about virtual-only annual general meetings.

Commonwealth Bank CEO Matt Comyn during the bank’s first virtual annual general meeting.
Commonwealth Bank CEO Matt Comyn during the bank’s first virtual annual general meeting.

Influential proxy adviser ISS has added its voice to the chorus of investor criticism about virtual-only annual general meetings, saying they restrict access to senior company officers and limit a fair and transparent exchange of views.

As Treasury consults on proposed changes to the Corporations Act which would remove any requirement for physical meetings, ISS noted its global policy survey, released last month, had shown 77 per cent of investor respondents supported hybrid meetings, allowing for both physical and online attendance.

Only 11 per cent of respondents backed virtual-only meetings.

“Virtual-only meetings can serve to limit shareholders’ ability to engage with corporate officials, raise questions, and hinder the transparent expression of views,” ISS head of Australia and New Zealand research Vas Kolesnikoff said.

“Examples of such concerns have been seen at some virtual-only AGMs in recent months.

“Due to the potential for virtual-only shareholder meetings to diminish shareholder rights, particularly without sufficient protections in place, we believe it is important for institutional investors with views on this matter to respond to the consultation, and make their views known.”

Last May, Josh Frydenberg introduced legislative relief to enable companies to respect social distancing requirements by holding their annual meetings online.

While the relief was later extended to March 2021, the government says in its consultation document that it wants to make the changes permanent.

It says the current requirements to hold physical meetings and post out documents are expensive, costing between $250,000 to $1m for each meeting.

“Furthermore, shareholders that choose to attend such meetings also incur costs and with many being dispersed geographically, this may include accommodation and transportation costs,” the consultation paper says.

“Accordingly, it is unsurprising that shareholder attendance at AGMs is low.”

Mr Kolesnikoff said an ISS analysis of the local annual meeting season so far had found about one in four companies were seeking shareholder approval to amend their constitution to permit virtual-only meetings.

Voting results for these resolutions, which require 75 per cent support to pass, were not yet available.

“This raises added concern that shareholders have not been given adequate time to consider the implications of the virtual meetings in this season,” he said.

“ISS will continue to closely monitor these and other developments for clients with holdings in the Australian market.”

Earlier this month, some Commonwealth Bank retail shareholders accused the bank of trying to sanitise proceedings, with questions submitted online not addressed at the meeting.

The virtual meeting only ran for two hours — reportedly the shortest in a decade.

Craig Caulfield from the activist group Bank Warriors said last week’s virtual-only Suncorp annual meeting was “better than CBA by a long shot” but “well short of Perpetual, which still had some issues”.

While Mr Caulfield said Suncorp chair Christine McLoughlin’s oversight of the meeting was professional, there was a “lack of connection” through the online platform.

“Looking into a camera rather than feeling the mood and responses, jeers or laughs, of hundreds of shareholders directly in front of you explains this — a further reason physical AGMs must be maintained post-COVID,” he said.

“Answers, however, were not always on point.

“There was no ability for me to respond to the chairman’s replies to my questions.”

Mr Caulfield said the chairman’s answer to his question on responsible lending was “simply obfuscated”, a generic response about looking after customers.

Add your comment to this story

To join the conversation, please Don't have an account? Register

Join the conversation, you are commenting as Logout

Original URL: https://www.theaustralian.com.au/business/companies/online-agms-restrict-access-and-limit-transparency-iss/news-story/bf07d4b70875468ddbe88b7b1323c445