Simple solution: A virtual meeting
What exactly is a virtual meeting? Think of it as an interactive webcast, but with better technology. Directors and management can either dial in from remote locations, or come together and manage the meeting from a single location. Shareholders can listen and watch online from anywhere in the world, pose questions and vote through an app on their smartphone, tablet, or computer.
"With so much anxiety and uncertainty surrounding the spread of the coronavirus, every company should be considering a virtual meeting," says David Becker, General Counsel and Chief Risk and Compliance Officer, Equiniti Trust Company. "If there was ever a time to try it, it's now."
Advantages of a virtual meeting
Social distancing: The most important advantage of a virtual meeting is, of course, the reduced risk of spreading a deadly virus.
Reduced costs: You'll save on event costs associated with a large venue, catering, and entertainment.
Improved shareholder perception: Efficient use of current technology strengthens your brand.
Moderated Q&A: Shareholders can submit questions early, giving management and directors time to prepare thoughtful answers.
Greater control of the meeting: Questions that come in during the meeting can be prioritized by importance to help meet time constraints.
Addressing the concerns of shareholders
Virtual annual meetings are not a perfect solution. Larger and institutional shareholders have expressed concerns that virtual meetings do not afford them the opportunity to have in-person contact with management and directors. Knowing that questions may be screened raises additional shareholder concerns.
With the current focus on controlling the spread of the coronavirus, it's unlikely anyone would find fault with a decision to hold a virtual meeting this year. Still, management should take care to address potential concerns by maintaining transparency and allowing time to talk to institutional investors before or after the meeting.
It all hinges on technology
With your reputation on the line, the technology vendor you choose to run your virtual annual meeting should be highly experienced. The technology should integrate seamlessly with any webcast provider and be accessible, intuitive and easy for shareholders to use.
Before you go there
Before moving forward with a virtual meeting, David Becker recommends talking to your counsel. Virtual meetings are permitted by U.S. state law, but legislation varies by state – in this case, the state in which your company is incorporated. There may be restrictions or requirements that must be met, such as a shareholder vote to approve the holding of a virtual-only meeting, or special notice provisions.
That said, we are in uncharted territory here. As this situation evolves, certain restrictions may be waived, so maintaining flexibility is key.
If your company can't meet the requirements to hold a virtual meeting, consider a hybrid meeting, which combines a physical meeting with a virtual meeting. Shareholders who wish to address the board face to face can do so at the physical meeting, while everyone else attends remotely. Companies wishing to cover all the bases should plan for a hybrid meeting, and move to a virtual one if necessary. The sooner you talk to your transfer agent the better.
An idea whose time has come
There will always be a need for engagement between shareholders and the companies they own, but thanks to technology, face-to-face annual meetings have become less necessary. While the coronavirus is forcing the move faster than you may like, virtual meetings do present an opportunity to increase shareholder engagement, representation, inclusivity and transparency.
"With everything else up in the air, your annual meeting doesn't have to be," says David. "A virtual meeting solves the immediate problem while moving your company forward."
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