Virtual shareholder engagement is trending: is it the way forward?

The number of virtual Annual General Meetings (AGMs) has surged over recent years, particularly during the pandemic when social gathering restrictions were in place.

Even as these limitations have lifted, hybrid AGMs remain the most popular format, as highlighted by the rise of platforms such as Lumi, an emerging online AGM solution provider, that has been widely adopted by FTSE100 companies like GSK, Marks & Spencer, and HSBC.

The use of software to facilitate AGMS such as with Lumi, supports both virtual and hybrid meeting formats, allowing shareholders to participate remotely via their computers or mobile devices. These solutions can ensure secure data exchange, real-time polling, and managed Q&A sessions, offering comprehensive features such as customisable branding, pre-meeting preparations, and dedicated support for broadcasting and meeting management, ensuring a seamless and efficient AGM experience.

From the perspective of listed companies, it can enhance corporate governance by increasing shareholder engagement and participation, regardless of geographical location. The platform's secure and transparent processes help build trust and credibility with shareholders. Plus, Lumi provides a cost-effective solution by reducing the need for physical venues and associated logistics, leading to significant savings. 

In 2016, it was employed by Jimmy Choo PLC, a luxury brand specialising in shoes and accessories, to hold the UK’s first electronic AGM for a listed company. The event allowed shareholders globally to participate, ask questions, and vote on resolutions using the AGM Mobile platform. The process was secure and accessible, ensuring a seamless experience for all participants​. 

The event received great reception. Jimmy Choo Chairman Peter Harf said after the AGM: “We are very pleased with the outcome of this process, which achieved its aim of broadening shareholder access to our AGM in the most convenient way possible.”

For shareholders, it offers the convenience of participating in AGMs from anywhere, ensuring their voices are heard through real-time voting and interactive Q&A sessions. The detailed reporting and recorded proceedings offered by Lumi also provide transparency and accountability, making it a valuable tool for both companies and their investors.

Listed companies must manage the risks of hosting an AGM on a virtual platform before enjoying the benefits. The biggest drawback of online AGMs is technical issues. If the platform's connectivity is not stable and reliable, lagging and errors can occur. This can lead to disruptions in communication, making it difficult for participants to follow proceedings, cast votes, or ask questions. Poor connectivity can undermine the effectiveness of the meeting, lead to misunderstandings, and reduce overall engagement. 

From the perspective of regulators and auditors, online AGMs present significant challenges in security and regulatory compliance. Regulators are concerned about maintaining transparency, fairness, and accessibility, while mitigating cybersecurity threats like hacking and data breaches. Auditors face difficulties in verifying participant identities, ensuring accurate and transparent electronic voting, and maintaining reliable records. Adapting traditional auditing practices to virtual environments requires additional resources and expertise. Navigating varying legal frameworks across jurisdictions adds complexity, making it crucial for companies to ensure compliance with all relevant laws and regulations during online AGMs.

Companies listed on the London Stock Exchange (LSE) must comply with LSE listing rules, which offer guidance and news on regulatory changes affecting shareholder engagement. Currently, there are no specific regulations for companies listed on the LSE according to the Rules of the LSE. However, it is anticipated that more listed companies will consider moving their shareholder engagement activities online for cost and convenience.

In Japan, besides AGMs, ‘Shareholder Perks’ are a common form of shareholder engagement, adopted by around 40% of listed companies on the Tokyo Stock Exchange, which is now the second-largest stock exchange after the NYSE. These perks, usually given as coupons or vouchers, include benefits such as free hotel stays, free entry to Tokyo Disneyland and free meals at chain restaurants. Japanese listed companies believe this traditional practice enhances the sense of pride and ownership among shareholders.

In 2024, ANN News in Japan interviewed a Tokyo family that has been utilising the Shareholder Perks system to save on daily expenses for the past seven years. In Mr. Ueno Koji’s special wallet, the Shareholder Perks coupons and vouchers are worth nearly JP¥1,000,000 (equivalent to around £5,000), which is more than enough for a day’s activities with his family. Mr. Ueno happily shares his tips with netizens on his social media.