Behind closed doors, at its headquarters in London’s West End, FTSE 100 distribution company Bunzl will hold its annual general meeting next week, attended by just two shareholders.
The company, which supplies businesses with products such as coffee cups and cleaning materials, had scheduled its AGM for 15 April at a five-star hotel, before the government restricted public gatherings of more than two people.
Investors can vote by proxy through the company’s chair, and submit written questions in advance, but are not able to dial in to listen to the meeting on Wednesday. The firm says its own rules do not allow for the meeting to be held virtually or digitally.
Bunzl is among the firms criticised by campaign group ShareAction for making it difficult for investors to hold company boards to account during the pandemic, and is concerned the extreme circumstances created by the health emergency could set a precedent.
The beginning of AGM season coincided with the nationwide shutdown; City law firm Linklaters estimates that around 40% of FTSE 100 companies are due to hold their AGMs in April and May.
So this year, at least, some familiar sights on the corporate calendar will disappear. On a spring weekday morning, it’s not uncommon to see pensioners queuing for an AGM outside the Queen Elizabeth II Centre in central London – a favoured shareholder meeting venue – opposite Westminster Abbey. Attendance offers retail shareholders the single chance of the year to question executive board, then receive a free lunch.
Executives, sat behind a long dais and a row of nameplates, rarely look like they are enjoying these occasions, as the company chair fields questions from the floor that range from the aggressive or adulatory to the incisive or meandering.
But public companies are required by law to hold an annual meeting within six months of their financial year ending – often the end of the calendar year, giving many a 30 June deadline. It is a time to face the music and meet some old adversaries among the retail investor community who attend such events assiduously, as well as campaign groups who regularly use AGMs – those of oil groups Shell and BP and defence giant BAE Systems in particular – to make a point.
Firms must give shareholders at least 21 working days’ notice of the meeting. Miner Rio Tinto and medical equipment manufacturer Smith+Nephew, which had already scheduled dates in early April, have scrambled to rearrange their plans.
A quorum of at least two people is required by law, depending on a company’s articles of association, the written rules which define how a firm must be run. This resulted in the bizarre scenario of Hikma Pharmaceuticals, a FTSE 100 drugs company, switching its AGM from a luxury London hotel to the home of the company secretary in the suburb of Surbiton.
Barclays’ meeting will take place at its London headquarters instead of Glasgow on 7 May. If government restrictions are still in place, the lender will hold a “virtual” AGM for the first time in its 123-year history.
Alok Sharma, the business secretary, has said the government intends to make it easier for companies to hold virtual AGMs, but, as at Bunzl, a company’s own rules may prevent this.
Luxury footwear brand Jimmy Choo held the UK’s first virtual, fully electronic AGM in 2016, during its brief stint as a public company.
Michael Kind, campaign manager at ShareAction, commends some companies like Rio Tinto, which offered shareholders the chance to ask questions in real time during an audiocast of the meeting, but is worried by others: “We have concerns that companies are not going to be held as accountable as they usually would be this season. This is especially worrying given how millions of people with pension savings are invested in a company’s shares, and workers are being laid off,” said Kind.
ShareAction has written to the government, asking it to “protect shareholder democracy” and ensure that this season’s changes to AGMs “should be a temporary solution”. Nonetheless, this year is going to set a precedent.
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