NORMALLY at this time of year, listed companies in Scotland, and their shareholders, would be gearing up for a key part of the corporate calendar.
The annual meeting season, which gets under way this week, offers shareholders a once-in-a-year opportunity to quiz company bosses directly on performance, and vote on key resolutions such as executive pay and the re-election of board members.
This year, however, things are going to be very different. Social distancing measures imposed to mitigate the spread of Covid-19 mean nearly all investors will be barred from attending annual meetings in person. And it could affect the degree to which company directors are held to account.
In recent days, companies such as John Menzies, Weir Group, Macfarlane Group and Royal Bank of Scotland have been sharing details about how their AGMs will be staged in the coming days and weeks.
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Given the continuing social distancing regime, which still no shows no sign of being eased in the UK, companies have been notifying investors that their attendance will not be possible this year. In fact, they have had to be quite blunt in ensuring the message gets across, stating in announcements to the City that shareholders will be refused entry if they try to attend.
Investors will still be able to vote on the resolutions tabled, either online, by post or by appointing a proxy in advance of the meetings. However, their ability to ask questions of those charged with running the businesses looks set to be limited.
State-backed Royal Bank of Scotland will hold its annual meeting in Edinburgh tomorrow (April 29). The meeting will take place with a quorum of employee shareholders, with investors voting on resolutions by proxy. The results of the ballots will be announced to the stock market at 2.30pm, which will be followed at 3pm with a virtual shareholder event on the bank’s website, featuring speeches from chief executive Alison Rose and chairman Sir Howard Davies. The bank’s leaders will also answer questions from shareholders submitted by investors in advance.
This last point is worthy of consideration. While there are no shortage of matters that can be usefully raised in advance – it could be asked, for example, what the customer reaction has been like to the planned name change to NatWest Group from the centuries-old Royal Bank of Scotland – shareholders will not have the chance to react on the spot to what Ms Rose or Sir Howard have to say on the day.
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The bank said shareholders had until the end of yesterday to submit questions, and has pledged that all questions will be answered. But it is surely not the same as having the opportunity to engage directly with bosses on a “live” basis, especially during such extraordinary times.
The economic upheaval wrought by the coronavirus pandemic is bound to be impacting on the performance of a bank, which, lest we forget, remains 62.4 per cent owned by taxpayers as a result of its £45.5 billion bailout during the financial crisis. With the Bank of England base rate now at a historically low 0.1%, and with speculation that major banks are likely this week to make huge provision for bad debts rising because of the impact of Covid-19, there is much ground to cover. Supplementary questions are bound to spring to mind when we hear what Ms Rose has to say on these issues.
Royal Bank AGMs have seen plenty of lively exchanges as the bank has clawed its way back from the abyss in the last decade. It is just a shame investors will be denied the opportunity to get similarly involved this time.
Of course, it must be emphasised that Royal Bank is not the only stock market-listed business registered in Scotland that is having to adapt its usual way of doing things amid the unfolding tragedy.
The annual meetings of Weir (today), John Menzies (Friday) and Macfarlane (May 12) will all be staged in a similar way, with shareholders only able to submit questions online in advance.
The current circumstances may dictate that companies currently have little choice.
It is to be hoped that the measures are temporary, and that investors will again have the chance to grill bosses on the spot when the AGM season returns in 2021.
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