"Completely antiquated": Corona is revolutionizing general meetings

The corona pandemic is forcing public limited companies to make a radical change: the meetings of the shareholders must take place virtually. And it looks like this form has won numerous fans.

If Roland Busch has his way, the Siemens Annual General Meeting this year was the last in the Munich Olympic Hall. "The virtual general meeting would be my first choice for the future," says the future head of the Munich technology group. The format of the online shareholders' meeting, which was hastily introduced in March due to the corona pandemic, has won many fans in boardrooms and investor relations departments – even if shareholder representatives and fund managers grumble. According to a survey by the German Investor Relations Circle (DIRK), only 22 percent of the companies from the Dax and MDax want to go back to a pure attendance general meeting in large exhibition halls or sports halls.

One possibility would be hybrid formats that enable participation on site and via the Internet. SAP boss Christian Klein could warm up to it: "At the last general meeting, I found it strange to sit all alone in the canteen in Walldorf and answer questions about our business development," he argues for a mixture of face-to-face and online Event off. "That combined well in the end does the shareholders justice the most. And that's what it's all about in the end."

Siemens boss Busch doesn't think so at all: "The costs and effort would not be significantly lower than at a general meeting in person." A company spends up to ten million euros on such a major event every year. But one must give the shareholders the opportunity to enter into a dialogue with the board of directors, says Busch – unlike at the annual general meetings since the end of April, at which the managers only read written questions and the answers to them. Those in charge view live statements from shareholders behind closed doors with concern: "What if a speaker suddenly sits in front of a swastika flag?" asks an investor relations manager.

Lectures instead of questions

This week the federal government extended the emergency ordinance for holding virtual shareholder meetings until the end of next year, but a permanent solution must be found for 2022. "One should take the opportunity to put an end to this outdated, outdated system of the German general assembly," says DIRK managing director Kay Bommer. Since 1965, the legislature has not dared to follow the regulations that make many shareholder meetings a test of patience for board members and supervisory boards, but also for shareholders. Because the questions that every shareholder can put to the company according to the law are presentations of up to ten minutes – on the balance sheet of the past year, the future of the company, but also on climate protection issues, the trouble with the new car or the insurance contract, or the quality of the roast, which is served outside the hall as a "natural dividend".

This is more of a deterrent for foreign investors, as Thomas von Oehsen knows. They viewed the German general assembly as completely antiquated, says the former Germany boss of the voting rights advisor ISS, whose advice is used by funds and other large Anglo-Saxon investors when voting. "It may be different with German fund companies." Union Investment and Deka only really discovered the Annual General Meeting as a forum in recent years. Von Oehsen, who now works for Hering Schuppener PR consultancy, is counting on reform: "The pressure is too great to simply turn the clock back two years. That would be detrimental to the share culture."

More participants

It is no coincidence that the attendance at the virtual shareholders' meeting this year – measured in terms of share capital – was even higher than at the face-to-face events in 2019, says von Oehsen. At the car manufacturer Daimler, up to 12,000 shareholders watched, reports a spokesman, in 2019 "only" 5000 came to the Berlin exhibition center.

Daniel Bauer from the Protection Association of Capital Investors (SdK) admits "mostly good" experiences with the online format this year. However, he rejects a purely virtual general meeting. The exchange between the shareholders suffered as a result. And: "There will always be resolution proposals that require a direct impression of the other person." The first votes on the remuneration of executive and supervisory boards are due in 2021. "It must therefore also be possible to exercise the right to speak in the virtual general meeting," as early as next year, demands the BVI fund association.

In the explanations of its ordinance, the Ministry of Justice also appeals that companies should "be as shareholder-friendly as possible" and allow questions to be asked during the general meeting. But it also shows sympathy for reforms: If major events are possible again, companies could "return to the general meeting in attendance or choose hybrid two-pronged formats," it says. But politics is playing the ball back to the companies: "They should also take the opportunity to adapt their statutes accordingly."

. (tagsToTranslate) Economy (t) Corona crisis (t) General meetings (t) Dax companies