Companies abandon shift to virtual AGMs after investor backlash

Qantas, Brambles, Bendigo and Adelaide Bank and others have torn up proposed constitutional amendments that would allow digital-only AGMS.

Australian Council of Superannuation Investors CEO Louise Davidson says the right for shareholders to participate in AGMs must be upheld. Picture: Aaron Francis

Australia’s biggest companies are abandoning plans to hold virtual annual meetings beyond the Covid-19 pandemic after facing a backlash from shareholders.

Treasurer Josh Frydenberg granted companies relief from the Corporations Act, allowing them to hold virtual annual meetings until March next year rather than in person, usually in hotel ballrooms or corporate offices.

But investors have fiercely rejected attempts to make virtual AGMs a permanent fixture, fearing they will lose the rights to eyeball and scrutinise company directors on their “one day of the year”.

Following shareholder resistance companies including Qantas, Brambles, and Bendigo and Adelaide Bank have torn up proposed amendments to their constitutions to allow virtual AGMs.

Meanwhile, vitamins maker Blackmores has since updated its guide for shareholders ahead of its AGM to make it clear it supports verbal questions, following an escalating feud between its chair Anne Templeman-Jones and biggest shareholder, Marcus Blackmore.

“Recent proposals from some ASX300 companies to enshrine virtual-only annual general meetings in their constitutions have been met with concern from investors,” the Australian Council of Superannuation Investors chief executive Louise Davidson said.

“We recognise that virtual meetings remain a necessity given the limitations on gatherings still in place in many Australian states. (But) there is a real concern from investors large and small that a move to virtual-only meetings in perpetuity could reduce the transparency and engagement of company meetings.”

To strike a compromise and stamp out any creep towards digital-only AGMs, federal parliament introduced new laws this week giving companies permission to hold hybrid – a blend of in-person and virtual – meetings on an ongoing basis.

The legislation also makes it clear that shareholders should be given a reasonable opportunity to participate in an AGM, even if they can’t attend in person.

It is a move ACSI has welcomed. “Legislation introduced by the federal government … provides protections for shareholder participation in AGMs. As limitations imposed by the pandemic recede, hybrid models that encapsulate both virtual and in-person AGMs would provide better balance than virtual-only meetings,” Ms Davidson said.

“Improvements to virtual meetings to give shareholders a reasonable opportunity to participate and speak verbally or in writing during meetings are expected to curb some poorer practices that developed in the 2020 AGM season. These included filtering or censoring questions provided in writing and preventing shareholders from speaking in real time.”

Qantas said although the use of “virtual meeting technology” was only proposed to be used in “exceptional circumstances” it abandoned the change ahead of its AGM on November 5 after listening to its shareholders.

Similarly, Bendigo and Adelaide Bank backflipped after receiving opposition from investors.

“One of the proposed amendments is to amend Rule 38 of the bank’s constitution which would allow the bank to hold meetings of shareholders using virtual meeting technology

only, which was only proposed to cater for highly unusual circumstances.

“Despite this narrow use intention, there have been some reservations expressed about companies holding virtual meetings. The board has determined that the proposed amendment will be withdrawn.”

Dexus withdrew its virtual AGM constitution amendment after receiving similar reservations”.

Meanwhile, Brambles said it last updated its constitution 11 years ago and had hoped to amend it to reflect the increased take-up of virtual technology.

The Australian Securities and Investments Commission has warned investors it will be looking to ensure shareholder rights are upheld as Australia’s biggest listed companies hold their AGMs in the weeks ahead.

“ASIC expects companies to comply with all of their AGM obligations. We monitor compliance and will take appropriate action as required,” an ASIC spokesman said.

Blackmores updated its shareholder guidance ahead of its annual meeting on October 27 to make it clear it supported verbal questions, following concerns from some shareholders that their questions would only be accepted in writing.