Virtual AGMs: Corporate Nigeria’s response to COVID-19

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Virtual AGM in progress

By CHINYERE JOEL -NWOKEOMA (News Agency of Nigeria)

THE coronavirus  pandemic, with its huge impact on economies, has led to closure of companies and offices, affected global stock markets, caused postponement of companies’ Annual General Meetings (AGMs) and opened options of Virtual AGMs, among others things.

According to a report by the Institutional Shareholders Services (ISS), as at March 31, about 557 meetings had been postponed or cancelled globally because of COVID-19, while the number of meetings that will be virtual-only or proxy-only stands at 560.

These figures are changing by the day as the pandemic is pushing into the traditional AGM season for many markets in the northern hemisphere.

In response to the stay-at-home orders and ban on gatherings, many countries, including Spain, Switzerland, Austria, United Kingdom and Nigeria, updated their regulations, allowing quoted companies greater freedom to hold virtual AGMs.

In Nigeria, virtual AGM is a novelty

THE Corporate Affairs Commission (CAC), in March, in view of the  pandemic, said companies could hold their AGMs by taking advantage of Section 230 of the Companies and Allied Matters Act on the use of proxies.

The CAC published guidelines and procedures that companies should follow in conducting AGMs states that approval of the CAC shall be obtained before a meeting is held, and that application for approval can be submitted to any of its offices.

It demands that the meeting shall only discuss the Ordinary Business of an AGM as provided in S.214 CAMA, while notice of meeting and proxy form shall be sent to every member in accordance with the requirements of CAMA.

According to the guidelines, all members shall be advised in the notice that in view of the pandemic, attendance shall only be by proxy, with names and particulars of the proposed proxies listed for them to select therefrom.

Guaranty Trust Bank on March 30 became the first quoted company in Nigeria to conduct an AGM with attendance by proxy when some quoted companies had notified the market about the postponement of their AGMs due to coronavirus. 

With GTBank’s bold step, many listed companies that had cancelled their AGMs did a U-turn.

A “normal” Annual General Meeting in progress

Among companies that have conducted their AGMs by proxy are  FBH Holdings, United Bank for Africa, Access Bank, Fidelity Bank, Union Bank of Nigeria, FCMB Group, Transcorp, Africa Prudential and Wema Bank.

Financial experts are convinced that the practice have come to stay.

A Professor of Finance and Capital Market at the Nasarawa State University, Uche Uwaleke believes that virtual AGM as well as AGM by proxy will still ensure payment of dividends to shareholders once approved at the meeting.

He also notes that it saves cost of attendance, saves time spent travelling and attending the meeting by shareholders.

According to him, it enables shareholders who are far away or in remote places and unable to attend physical meetings to participate in discussions and voting, which are done electronically.

Uwaleke says however, that a virtual AGM does not allow  bonding among shareholders and networking, which physical AGM promotes.

He said: “A shareholder may also face issues, if in a remote location, of electricity and internet service, and a local shareholder may not be recognised to air his views in a virtual meeting.

“Unlike in a physical setting where one can keep one’s hands in the air to draw the attention of the presiding officer, virtual meetings may not give shareholders, especially the minority and ‘troublesome’ ones, equal opportunities to be heard during AGMs. 

“The chairman of the meeting can pretend not to notice a shareholder who indicates to speak through the hand symbol, using Zoom, for example.”

On the advantages of a virtual meeting to a company, he said that, “it saves the company a lot of time spent and logistics associated with organising the event. 

“Resolutions including voting may be faster and not as rowdy as obtained in physical meetings.”

Uwaleke points out that the success of a virtual meeting depends on availability of enabling technology, especially internet service.

“Technology can fail, leading to disruption of the meeting; unlike a physical meeting where shareholders can be seen, it may be difficult in a virtual meeting  to know those who actually participated,” he adds.

The immediate past Publicity Secretary, Independent Shareholders Association of Nigeria, Mr. Moses Igbrude said Nigeria must embrace the new normal.

Noting how many companies postponed their AGMs, thinking the pandemic would soon pass, he added that, “should we stop doing business or develop new ways of doing things until normalcy returns?  Virtual AGM by proxy is the one of the new normals.”

The National Coordinator, Progressive Association of Nigeria (PSAN), Mr Boniface Okezie said the virtual meeting option is  not stated in the law of CAMA.

According to Okezie, the CAC was reluctant to approve the AGMs because it was not in CAMA.

He noted: “This one just came from an emergency situation, as this is not what was planned.

“As long as there has not been an amendment to the law of CAMA,  there is nothing of such called virtual AGMs. It is noteworthy that companies should not abuse these things.

“A lot of these shareholders were disenfranchised due to virtual meetings which I think will result in some of these companies perpetrating illegalities, which could have been challenged by shareholders.

“After the pandemic, we cannot do this same type of meeting because, to get technology to continue, involves a lot of money,  and I cannot advise companies to start spending on technology from investments made from  shareholders.”

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