Credit Suisse is holding its upcoming vote on the controversial capital increase without an audience. Many companies did this in 2022 and continued to hide behind the pandemic to avoid shareholders. In the long run, this harms the economy itself.
General meetings should be more than a compulsory exercise for companies: Here the owners decide on the performance of the management and board of directors.
On November 23, Credit Suisse (CS) invites you to an Extraordinary General Meeting. The reason is unpleasant: the bank needs more equity, the shareholders have to give it to them. Either they participate in the capital increase and buy new CS shares, or their shares are further diluted. Either way: the shareholders, who have been part of the strong price collapse of the CS title over the last few years, should not be happy.
It would be expected that angry small shareholders would wash the cap of the bank management on this occasion, as they have been doing for years at general meetings. The board of directors and management have to endure that. But nothing there: According to the invitation, the AGM will be held “in accordance with Ordinance 3 of the Federal Council on measures to combat the corona virus without the personal participation of shareholders”. It won’t even be webcast.
Shareholders can submit questions and – of course – vote in advance. But the CS leadership can prepare the answers to the questions. The event is thus driven out of any spontaneity. This digital distance is comfortable for the management and the board of directors. There will be no footage of old gentlemen at the lectern reading the riot act to them. And recordings that are never made cannot be broadcast later in the “Tagesschau” or on “Blick TV”.
CS is by no means the only company that has set up home in a state of emergency. The ordinary general assemblies in spring 2022 generally continued to take place without a physical presence. This was justified by the fact that the federal government’s special corona regime was still in force at the beginning of the year when planning for the GM started.
In 2020 and 2021, the special rules made sense given the rampant pandemic, but thanks to vaccination, society has regained freedom. Major concerts and football games with thousands of fans are now taking place again. General assemblies must also be possible there.
Some companies have already reacted: ABB held its extraordinary general meeting on September 7th in the exhibition hall in Oerlikon. Breakfast was served from 9 a.m. and started at 10:30 a.m. 503 shareholders took part and approved the spin-off of the turbocharger division under the name Accelleron with a large majority.
Of course: The “shareholder democracy” is a census voting right. Whoever holds a lot of shares decides. Small shareholders can hardly influence the votes. But that’s not what it’s about, it’s about the exchange with management and the board of directors. They should physically see and experience the owners of their business at least once a year. Namely, when these owners vote on the company’s wage and bonus packages. On voting Sundays, the economy likes to complain that the population is alienated from it. A proper GM helps to fill in that ditch a bit.
The above-mentioned “Federal Council Ordinance 3” will remain in force until the end of 2022. From 2023, however, the revised company law will apply, which will also give companies more leeway. In the future, you can hold your AGM at several locations in parallel, as a hybrid event – or purely digitally. However, they must ensure that the shareholders can also exercise all their rights via computer, i.e. that they can participate live and interactively. The companies should not be satisfied with the minimum, but allow more exchange and controversy at their AGM. It’s just a gesture. But an important one.