Majority of Corporations Opt to Stick with Chosen Format for Shareholder Meetings, Survey Finds

After the first season under the new legal framework, companies are largely satisfied with the format of their general meeting (AGM). According to a survey by the law firm Taylor Wessing and the PR consultancy Edelman Smithfield, this applies equally to the virtual format as to the face-to-face meeting. 229 companies that hold their shareholder meetings under German law were surveyed; 110 companies from the DAX family and Prime Standard responded.

The distribution of virtual AGMs and face-to-face meetings was roughly the same in the group of companies surveyed, with a slight predominance of the purely online format.

Companies with higher market capitalization preferred the virtual AGM; in the Dax 40 alone it was a clear majority of 71% of the index members. In contrast, according to the analysis, companies with lower market values ​​returned to traditional in-person meetings after the pandemic period.

Looking ahead to the coming AGM season, there are few signs of change. “All companies are very willing to stick to their chosen format in the coming years,” says Nikolaus Plagemann, capital markets lawyer at Taylor Wessing. Due to the companies’ “high level of satisfaction” with the virtual AGM, the lawyer believes that this format is emerging as “a permanent solution in which everyone involved would continually build up further experience.”

According to the survey, the proportion of companies using the virtual format could continue to increase. 9% of the companies that held their AGM in person were open to a change. “Some companies may have waited to see how virtual AGMs initially performed among large companies and first movers. The share of virtual AGMs could therefore increase, especially among smaller companies,” says Plagemann.

According to the survey, at least 30% of all respondents are still undecided whether they want to keep the format chosen for 2023 (virtual and physical). From the perspective of the creators of the study, “the new virtual AGM has passed the practical test”.

The hybrid AGM, which is preferred by many investors, finds little acceptance among issuers. “Companies are not very convinced by the hybrid format; from their point of view it combines the worst of both worlds,” says Taylor Wessing lawyer Sebastian Beyer. “It leads to additional complexity, is more complex and therefore more expensive. Legal and procedural security is the priority for companies here,” says the lawyer, summarizing the opinion. There is “a lot of talk about it” on the investor side, but the hybrid AGM “as such is not regulated by law”.

Unlike investors, the two lawyers cannot see any advantages of the face-to-face format. “The idea that shareholder protectors, management and shareholders have to look each other in the eye once a year is not shared by everyone involved,” says Beyer. This assessment comes from ancient times and must be critically questioned today, also from a sustainability perspective. In the lawyer’s opinion, it is “not obvious that the mutual perceptibility in a video communication should be less intense than in a large hall.”

From the lawyers’ perspective, it is difficult to estimate whether the lively discussion about the appropriate AGM format will continue. “We will still experience this next season, probably not with the same intensity,” suspects Beyer. However, a certain amount of getting used to is to be expected, “so that the debate about the virtual AGM should die down over time,” he says.