The 2020 season of general meetings of listed companies is coming to an end. This is the time to take stock of this particular period during which all players, issuers, centralising banking agents, professional organisations, legislators and market authorities have had to innovate in the face of the new conditions resulting from the COVID-19 crisis.
It was not a foregone conclusion. At a time when the main European countries, including France, were confining themselves, a problem arose: how to hold an annual general meeting of shareholders (AGM) when gatherings of people are prohibited?
Some issuers initially tried to save time by postponing the date of their meeting by a few months. However, given the changing health situation, the solution of holding meetings behind closed doors, which in France was reinforced by the adoption by the public authorities of the ordonnance of 25th March 2020 and confirmed by the decree of 10th April 2020, was finally accepted by all.
By not physically opening the doors of the meetings, it became even more crucial to guarantee shareholder democracy and to give shareholders the means to transmit their votes before the meetings were held. But in the midst of a period of confinement, how can we ensure that paper invitations are sent out? And how can we check that shareholders have received the notices and are therefore able to return them in time for their votes to be taken into account?
Faced with these uncertainties, an alternative solution of digital pre-meeting voting proved to be essential. In France, the VOTACCESS remote voting solution, developed at the initiative of all the players in the Paris market, has been operational since 2011. Attracted by this platform, many large companies had, well before the COVID-19 crisis, modified their articles of association to allow remote voting at their AGMs. The French decree of 10th April 2020 gives all companies this possibility, without the need to update their articles of association. Thanks to this salutary assistance from the French legislator, many issuers were able to urgently access pre-meeting internet voting this year. "The number of CACEIS clients who opted for VOTACCESS in 2020 has more than doubled", said Laurent Drouin, Head of Clients, Corporate & Banks, CACEIS in France.
"Feedback has been excellent. Shareholders naturally turned away from the paper form to use the internet; the number of votes did not decrease but actually increased. Indeed, some of our clients have seen a significant increase in their quorum" indicates Laurent Drouin.
This confirms that the digitisation of the vote did not disturb the shareholders, as was already the case when the attendance sheet for the AGMs was digitised on tablets. This solution, first implemented at CACEIS' initiative in France in 2017, became the standard in just two years. "We are very optimistic and believe that VOTACCESS will become the preferred solution for all issuers as early as 2021 for the collection of shareholder voting instructions in France", said Laurent Drouin.
As far as holding shareholders' meetings behind closed doors is concerned, nothing is less certain. While this exceptional solution allowed the AGMs to be held in spring 2020, it did not allow participants to interact face-to-face with the office of the AGM. Alternative procedures were certainly put in place, such as the increased possibility of asking questions before the meeting, the provision of a telephone platform, or the live audio or video transmission of the meeting. Nevertheless, the number of shareholders who made use of these alternatives was often disappointing. In the end, communications were not really established and shareholders and boards of directors alike were not satisfied.
In light of this, the concept of a general meeting that brings together, both indoors and virtually, the shareholders of a listed company and their managers is gaining ground. Here again, the technical solution exists and is already being used in some countries. It allows all shareholders to participate and vote at an AGM, either in person or remotely.
"CACEIS has discussed this new form of meeting, known as a "hybrid" meeting, with its clients and within professional organisations. It was even considered by some issuers this year, but it has suffered from competition from behind closed doors, which is simpler to set up and legally fully regulated. The issue of authentication of bearer shareholders participating remotely is a matter of debate", explains Laurent Drouin.
This question does not arise in France for unlisted companies whose shares are all registered and whose shareholders are therefore identified. Furthermore, as the VOTACCESS platform is dedicated solely to voting at the AGM of listed companies, CACEIS has developed a proprietary internet voting system for non-listed companies. "Last year, we assembled and held the first "hybrid" meeting for a subsidiary of a major banking group. This year, we are going to assist other clients by offering for the first time a completely digitised process including the convocation of shareholders, the pre-AGM vote, the signing of the attendance sheet and the possibility to participate and vote remotely during the meeting", says Laurent Drouin.
In conclusion, have shareholders' meetings taken another step towards digitisation in 2020? Yes, certainly, and without the health crisis, the digital transformation of AGMs would probably have been slower. Digital innovations were not born of the crisis. Nevertheless, the COVID-19 crisis has greatly accelerated a process that has been underway for many years. This leap forward towards the digitisation of the processing of shareholders' general meetings will be appreciated by all players in the securities industry on the eve of the entry into force of the Directive II on shareholders' rights, SRD II.