Government calls for shareholder days in lieu of AGMs

The government has called on companies to hold shareholder days to give investors the chance to interrogate boards when Covid-19 limits on annual general meetings are lifted.

Britain's annual general meeting season would normally be getting under way, exposing boards to awkward questions from shareholders in conference centres, hotels and other public venues.

For big companies' meetings, crowds of often older individual shareholders queue for the chance to discomfit company chairmen followed by a buffet lunch. Institutional shareholders sometimes take the chance to ask difficult questions over pay and other matters.

But the Coronavirus shutdown has prompted companies, sometimes willingly, to hold AGMs behind closed doors with votes cast by proxy. Members of the public are excluded and many companies are not letting shareholders ask questions in real time. Few online AGMs are taking place because there is not enough capacity and some companies' rules do not allow them.

The government is legislating to help companies meet their statutory obligations while holding skeleton AGMs. It says doing so will give companies more time to manage their businesses during the crisis.

In guidance for companies, the Department for Business and the Financial Reporting Council told boards to keep up engagement with shareholders before and after AGMs, including putting up directors for questions in person at a later date.

"Companies should consider holding shareholder days later in the year, which will offer shareholders access to the board in a similar way to an AGM," the guidance said. "This will maintain the dialogue between those shareholders who would normally attend and ask questions at an AGM."

Groups such as ShareAction, which sends people to AGMs to ask questions about environmental policies and other issues, have warned that scaled down meetings risk undermining shareholder democracy. ShareAction has asked the government to make sure changes to AGMs in 2020 are a temporary measure.

Restrictions on AGMs may come as a relief to some companies. Barclays' directors will not have to face questions about Chief Executive Jes Staley's past links to convicted dead paedophile Jeffrey Epstein. Activist investor Edward Bramson has agreed not to vote against Staley to avoid disruption during the coronavirus crisis. Barclays has said it has confidence in Staley.

HSBC's board will also avoid interrogation after a year of chaotic governance capped by the cancelling of the bank's final dividend, which has infuriated Hong Kong shareholders. If the shutdown lasts until September Sports Direct owner Frasers will open itself to even less scrutiny than usual at its AGM.