‘Virtual’ agms to become the norm as third Covid wave hits business

Irish publicly-quoted companies are set to continue to hold “virtual” annual general meetings (agms) this year as the State battles a third wave of the coronavirus pandemic, according to leading law firm Mason Hayes & Curran.

Some 56 per cent of Irish plcs reviewed by the firm strongly discouraged shareholders from attending their agms last year, while 36 per cent held closed meetings that investors were prohibited from attending.

Dublin-based but London-listed Grafton Group successfully fought a legal challenge in April by its former chairman and largest shareholder, Michael Chadwick, against its decision to hold a closed meeting. The High Court cited the fact that there was no evidence other shareholders supported Mr Chadwick's position, and the likelihood of creating uncertainty in the market by granting an injunction, in its ruling.

However, the Companies (Miscellaneous Provisions) (Covid-19) Act 2020, enacted in August, introduced temporary provisions that facilitate an Irish company to hold a true virtual general meeting, with no physical venue, for the first time. The interim period of the Act was extended just before Christmas to June 9th, 2021.

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Mason Hayes & Curran said virtual agms will remain a feature of Irish corporate life this year. It comes at a time when Irish Covid-19 infection numbers are running at record levels, with 4,962 cases recorded on Sunday, pushing overall numbers beyond the 100,000 mark. Health officials say it will take up to two weeks for Level 5 restrictions introduced on December 24th and December 30th to have an impact.

Technology

The Act clarifies that the technology used must enable the attendee to hear what is said and to speak to the extent they are entitled to do so under a company’s constitution. Many companies only allowed shareholders to submit questions in advance of agms in 2020.

Some 72 per cent of listed companies sought shareholder approval during 2020 to allow them to place shares equivalent to 10 per cent of their stock in circulation, without offering existing investors first refusal, according to the Mason Hayes & Curran report. That was up from 59 per cent in 2019, and reflects how businesses rushed to open additional fundraising avenues during the crisis.

Publicly-quoted Irish companies alone raised more than €3.6 billion in 2020, as businesses sought to get ahead of potential balance-sheet issues or secure an advantage over rivals.

UK rules

Some London-listed Irish groups, including Greencore and Smurfit Kappa, took advantage of temporary UK rules allowing companies to place up to 20 per cent of their issued share capital without going through the usual process of preparing prospectuses and holding extraordinary general meetings.

Only 36 per cent of Irish plcs sought shareholder approval for a final dividend in 2020, down from 59 per cent in 2019, according to the report.

It also found that 29 per cent of seats on Irish plcs were held by women last year, up from 25 per cent for the previous year and 19 per cent in 2018.

AIB has made the most progress in this area, and now has a board comprising a majority of female members, it noted.