LSE leads push to allow ‘virtual’ AGMs over COVID-19

The London Stock Exchange Group (LSE) and other City institutions are pushing for emergency legislation to allow companies to stage virtual shareholder meetings as the coronavirus pandemic threatens a wave of key corporate events.

Sky News has learnt that the LSE is among the parties which want the Department for Business, Energy and Industrial Strategy (BEIS) to amend the Companies Act ahead of widespread disruption to this year’s AGM season.

Several law firms and major listed companies are also lobbying the government to take urgent action.

The COVID-19 crisis has raised fears that many of next month’s deluge of AGMs will be either postponed or damage shareholder democracy by attracting a negligible attendance.

AGMs provide the most significant annual opportunity for investors to hold company boards to account, and with many businesses in a state of turmoil because of the outbreak, the meetings will be of particular importance this year.

The government’s advice to restrict in-person gatherings, with “social distancing” now a requirement, has led to boards questioning the logic of proceeding with a physical meeting.

A substantial proportion of people attending AGMs are retired private investors, meaning that their age places them among those at highest risk of contracting coronavirus.

Similarly, corporate boards are frequently populated by people in their 70s, further underlining the risks.

HSBC Holdings, Europe’s biggest lender, has already warned of potential disruption to its AGM in April, although it is understood to have taken legal advice that it can hold a ‘hybrid’ meeting, where physical and online voting take place simultaneously.

Many companies, however, are not permitted to hold virtual AGMs under their articles of association.

Linklaters, the law firm, said earlier this month that hybrid meetings were “unusual in practice so far”.

“A minority of companies may have articles which allow them to hold general meetings that are entirely electronic.

“These ‘virtual-only’ meetings are even more unusual in UK practice and the standard investor guidance recommends that a physical place of meeting should always be provided.”

It was unclear this weekend how the government would respond to calls to amend the Companies Act.

A spokeswoman for the LSE declined to comment on Friday.