Clifford Chance

Will the meeting be hybrid, physical only or physical with some opportunity for shareholders to follow the event remotely. The right format is likely to be influenced by the type of meeting the company has held in the past and attendance levels, any investor calls for hybrid facilities and the level of retail shareholder participation. We do not expect a significant increase in the number of hybrid meetings in 2023, as companies balance the added cost and complexity against the likelihood of increased shareholder participation.

In line with the FRC Good Practice Guidance for Company Meetings, the AGM notice should clearly set out details of the format and what shareholders need to do to take advantage of any electronic facility.

Since the pandemic, the list of contingencies to consider has grown to include: What happens if electronic facilities fail? Is there back-up Wi-Fi, and how will electronic participants receive updates? How long can you legitimately pause the meeting to troubleshoot before adjourning the meeting? What happens if there is disruption (or threatened disruption) at the venue from activists? What additional security staff and procedures would be required?

With high-profile disruption becoming increasingly common, the FRC guidance recommends that companies make it clear in their AGM notices that unacceptable behaviour will not be tolerated and will be dealt with accordingly.

The pandemic practice of asking shareholders to submit questions in advance with responses provided either via the website or separately in writing seems set to remain. Last year approximately 75% of FTSE 350 companies encouraged shareholders to submit questions in advance, although this does not seem to have resulted in a corresponding increase in the number of questions asked.

The FRC guidance suggests:

• Where there is a virtual element, questions should be invited by the chair from all channels. Companies will need to consider how best to co-ordinate with the chair on this.
• Companies should explain how the advance questions will be grouped together.

The new Pre-emption Group Statement of Principles provides companies with greater flexibility to disapply pre-emption rights on an annual basis (up to 10+2% for general purposes and 10+2% for an acquisition or specified capital investment, with the additional 2% being for follow-on offers to retail shareholders).

Whilst the Statement of Principles is supported by the major investor groups and the market, companies may wish to ascertain major shareholders’ views (either directly or via their brokers) and also consider whether there has been any historic resistance or objection to the pre-emption disapplication resolution at prior AGMs before deciding to seek the increased authority.

Whilst we have seen a significant increase in climate resolutions at AGMs over the past four years it is unclear whether this will continue as companies and investors refocus on the cost of living and energy crises in 2023. This shift might lead to more resolutions being proposed on the living wage (as at the J Sainsbury plc 2022 AGM) and/or demonstrations by unions demanding higher wages (as at the Lloyds Banking Group 2022 AGM), and fewer on climate policies.

Where a ‘say on climate’ resolution is included, consideration should be given to whether this will be advisory only, and also to whether it will be a vote on the company’s climate policy or a vote on the reported outcome of that policy.