The Annual General Meeting (AGM) of listed and quoted companies can, at times, be heated and controversial affairs. The Chairman of the meeting is responsible for managing discussion at the meeting. The skills of the Chairman in managing debate, and the Company Secretary’s preparation in briefing the Chairman and the Board, are therefore crucial.  Is your AGM Chairman aware of his/her obligations to allow debate and answer questions at the AGM?  
 

What obligations are on a company to facilitate debate and answer questions?

Shareholders have a statutory right to ask questions at the AGM and for these to be answered (s.319a CA2006).  But there are some exceptions.  The question does not need to be answered if to do so would involve the disclosure of confidential information, if it is not in the interest of the company or the good order of the meeting that the question be answered, or if the answer has already been given on the company’s website (in the form of an answer to a question).  The Shareholder Rights Directive, introduced in 2009, also codified the right of shareholders to have questions answered at general meetings.  The ICSA issued valuable guidance on the implementation of the Directive in July 2009.  Aside from these statutory obligations, companies are encouraged under the UK Corporate Governance Code (provision E.2) to use the AGM to communicate with shareholders and encourage their participation.  This clearly makes good PR sense.  The Code also requires that Chairs of certain committees are available at the AGM to answer questions.  

How can companies prepare?

Inviting questions in advance: this is a useful way of providing the Chairman and the Board with an indication on issues of importance to shareholders and therefore which may require the most explanation at the meeting.  The Chairman, Board and Company Secretary will need to decide how to include these within the Chairman’s script, or to cover in a more informal way after the meeting.  Companies could also provide a written summary of questions received, and answers to them, at the start of the meeting and on their website after the meeting.

The Chairman’s script should set the scene at the start of the meeting by reminding shareholders that questions should relate to the formal business of the meeting, debate will be allowed on one topic at a time, all shareholders should be given an opportunity to speak and the Chairman will exercise his/her right to keep any discussion within reasonable bounds.

A company must ensure that no Inside Information is released at an AGM unless it has previously or simultaneously been notified to an RIS.

Chairs of the Audit, Remuneration and Nomination Committees should be available to answer questions at the AGM.  These Chairs should therefore be fully up to speed with company-specific Audit, Remuneration and Nomination Committee issues and the content of the relevant sections of the Annual Report, along with sector-specific and industry-wide developments in these areas.  

The Company Secretary should prepare a selection of suggested Q&A, which will of course vary from year to year and depend on the company’s activities and sector.

The Chairman should be briefed on the company’s PR strategy for dealing with questions from activist shareholders.