Frankfurt / Main (dpa) – Protests in front of the hall, loud criticism from shareholders, meeting marathon – board members of major German corporations were largely spared all of this in the Corona year 2020. Because of the pandemic, the companies completely relocated their annual general meetings to the Internet.
Because the situation remains uncertain, the federal government extended the special regulation for virtual shareholder meetings until the end of 2021. This is not undisputed.
The German Association for Protection of Securities Holdings (DWS) and the European investor protection association Better Finance have analyzed how virtual general meetings worked in Europe – and what that means for shareholder meetings in the post-Corona era. The study will be presented this Tuesday (10:00 a.m.).
Why are general meetings important?
The general meeting – in short, AGM – is the most important decision-making body of a stock corporation alongside the board of directors and the supervisory board. Once a year, shareholders have the opportunity to personally express their opinion on the management of their company. In addition, the shareholders make important decisions: The Annual General Meeting votes on, for example, the distribution of dividends, possible capital increases or elections to the Supervisory Board.
What special regulations apply due to the corona pandemic?
Typically, the board of directors, board of directors and owners of a company must physically meet to take decisions. This is what the German Stock Corporation Act prescribes. But because several thousand people usually come together at such gatherings, lawmakers allowed stock corporations in Germany to have “virtual general meetings” for the first time in the Corona year 2020.
How was that used?
According to the Deutsches Aktieninstitut, 28 of the 30 groups in the German Stock Index chose the digital route for their annual general meeting this year. The other two DAX companies had already held face-to-face meetings in February – even before the corona crisis had a full impact in Germany. The pharmaceutical giant Bayer, which on April 28th was the first Dax group to hold a general meeting entirely online, drew a mixed conclusion: the virtual general meeting was much cheaper – the costs would be between a third and a quarter of the usual amount. The short-term organization of the new format was nevertheless a “show of strength” and a “mammoth task”.
Which regulations apply for 2021?
Companies, associations and foundations will also be able to forego face-to-face meetings throughout the next year. The federal government extended the special regulation that originally applied until the end of 2020 by a full year. “It cannot be ruled out that further waves of the pandemic will occur in 2021, that restrictions will persist or that there will even be further restrictions,” the Federal Ministry of Justice justified the decision.
Is there any criticism of the process?
The shareholders’ association DSW described the pure online AGM as a “temporary solution” as early as the spring. The “curtailment of shareholders’ rights, for example with regard to the right to ask questions or the possibility of contesting decisions in court” is “to be assessed critically,” said DSW managing director Marc Tüngler. The Federal Association of Investment and Asset Management (BVI), as the mouthpiece of the German fund industry, judged: “In the 2020 annual general meeting season there were fundamental restrictions on shareholder rights.” The general meeting “as the supreme control body and mouthpiece of the shareholders” suffered “massively due to the Covid-19 emergency legislation”.
Were the shareholders not involved at all?
The shareholders were free to submit questions in advance, but they did not have their say in the online AGM. In order to loosen up the event at least a little, Deutsche Bank had a moderator present the questions from the shareholders. The BVI fund association emphasized that it was important that shareholders could express themselves in a discussion: “It must therefore also be possible to exercise the right to speak in the virtual general meeting.”
Aren’t there also advantages of digital general meetings?
As a supplement to the face-to-face event, Jens Wilhelm, CEO of the Union Investment fund company, can also imagine digital channels in a time after the pandemic. It “makes perfect sense to enable more shareholders to attend the general meeting online in the future,” said the manager in the spring.
© dpa-infocom, dpa: 201214-99-690167 / 7
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