Government “pressing ahead with plans to allow Virtual AGMs”
[Originally posted on Linkedin]
The Government recently announced that it is “pressing ahead with plans to allow Virtual AGMs“. In my view this would be a backward step, both for the UK, and for Corporate Governance standards.
Before you think that the above is simply HMG support for hybrid (combined physical and virtual) meetings, think again, as this coverage by Patrick Tooher writing in This Is Money makes clear, quoting the minister responsible:
“These changes will give directors and shareholders the power to decide to hold fully virtual annual general meetings and decide what’s right for their business.”
Blair McDougall, Minister for Corporate Governance (Mail on Sunday article)
I’m not alone in my concerns: ShareAction & Governance for Growth Investor Campaign (GGIC) to name just two stakeholder groups are also worried. Catherine Howarth (on LinkedIn) and Luke Hildyard of ShareAction set out their concerns succinctly:
“We should be extremely wary of AGMs that are conducted exclusively online with no in-person element. This makes it much easier for boards to manipulate the agenda, ignore questions and avoid scrutiny to the ultimate detriment of good governance.”
Luke Hildyard, ShareAction
I’ve seen this behaviour firsthand as a member of Nationwide Building Society at the last two AGMs I attended. The chair gets to pick and choose who to take questions from, which to prioritise, and which to effectively ignore. Members cannot congregate at the meeting place and discuss matters amongst themselves. The full list of questions posed by members are never shared, let alone answered.
How did we get here? Nationwide moved to a virtual-only AGM in a classic bait and switch, which – noting the Minister’s comments above – demonstrates why legal protection is important.
In 2020, during the pandemic, David Roberts (then Nationwide chairman, now chair of the Court of Directors at the Bank of England) asked members to support a rule change to allow virtual attendance, stressing:
“…unless there are exceptional circumstances, the intention will be to hold a combination of both physical and online meetings and not an exclusively virtual or online meeting.”
David Roberts, Nationwide chairman, addressing members ahead of a vote to change the society rules at the 2020 AGM (transcript)
Fast forward to 2023 and the current chairman, Kevin Parry OBE, presides over a virtual-only AGM without any ‘exceptional circumstances’ cited, but using the example of recent low attendance – during the pandemic at difficult to reach locations – as justification. Read more here: Debasing the membership (part 1): Nationwide’s virtual-only AGM
Nationwide is currently the only Building Society in the country to hold a virtual-only AGM. All the other 41 societies, to the best of my knowledge, still allow members to attend the AGM in person.
It was unclear whether the Building Societies Association supported virtual only AGMs – so I wrote to Sarah Harrison, the new CEO, for a response. The reply was simple: it’s up to individual societies to decide.
While we await more news on how the Government is going to clarify the legal situation, I recommend concerned members should contact their MP and the Building Societies Members Association.