Shareholder meetings evoke two extreme views among corporate professionals. One is that of necessary pain to be tolerated and endured and to get through with least discomfort, as quickly as possible and the other view is to anticipate and prepare for Annual General Meetings (AGMs) as an opportunity to take stock on multiple compliance and governance fronts and create effective engagement with shareholders and potential investors who are necessary for its growth and prosperity.
While the two views could oscillate in the same person based on their current corporate needs and their recent experiences, this article seeks to pose five questions which a corporate professional could answer to measure the effectiveness of their AGMs in enabling good governance and effective stakeholder engagement.
- How does the company view their Annual Report?
Annual Report preparation can be viewed as an act in isolation undertaken only for the purpose of meeting regulatory requirements. In this view, the cost and efforts spent on Annual Reports are minimised as it cannot be eliminated. On the other hand, Annual Report preparation can also be viewed as the trigger to stocktake corporate law compliances and review the governance practices by benchmarking it with the leading global practices. Seen this way, Annual Report preparation is a planned, structured activity in which adequate time is invested to enhance the quality of governance and compliance systems in the company. This benefits in higher stakeholder engagements and if sustained, leads to higher corporate valuation, a result of improved governance perception.
- What role does the AGM play in shaping the investor communication plan for the year?
Companies both listed and unlisted communicate with their investors irrespective of whether they have a plan for it or not. Investor communication would cover not only the content of communication, but also its mode and frequency. Seen from a holistic perspective, AGM can play a key role in shaping the investor communication plan of the company by involving the entire Board and the leadership team. By consciously planning investor communication strategy at the time of AGM, which is right after the financial performance for the previous financial year is finalized and targets for the current year is set, focus areas for investor communication and the related artifacts can be created for the AGM, which can be used right through the year in investor and business communications where appropriate.
- How are other stakeholders like the directors, auditors, analysts, fund managers, journalists, and employees encouraged to participate in the AGM?
AGMs can be occasions for brand building and reinforcement of good governance as companies like Reliance and Infosys have shown in the past, by converting these routine meetings into a major news event. Likewise, companies can use AGMs engage with all stakeholders, especially analysts, fund managers and journalists and create a positive image that can be leveraged for fund raising in the future.
- How has the company adapted to Virtual shareholder meetings?
With lockdown, the last two years have seen the advent of Virtual AGMs. It may be there to stay even after the pandemic restrictions are lifted. Companies can adapt to Virtual AGMs by creating interesting and impactful video clippings to communicate with their shareholders and record the address by the Chairperson or business presentations by their business leaders to the shareholders that can be used on different occasions, including hosting it on their website for creating powerful impact and recall.
- What is the trend in investors attending the AGM over the years?
Impactful AGM can be measured by the number of people attending the meeting in person or virtually. Equally important is the coverage of the event in press, both traditional and the virtual media. In the age where content rules supreme, AGMs can be leveraged to create content that has high news value and can be repeatedly used through the year in marketing, business, and financial communication.
To conclude, AGMs can be treated as a cost center and conducted on a tight budget and minimum involvement of the board and leadership team, or AGMs can be treated as a significant event to stocktake governance and compliance practices and used to create investor communication plan, which can also be leveraged for the website, investor and marketing communication of the company, thereby building stronger stakeholder engagement and enabling good governance.