Chinwendu Obienyi
Capital market operators and shareholders of quoted companies have kicked against the continuation of virtual Annual General Meetings (AGMs) immediately the COVID-19 is contained.
A cross section of the stakeholders who expressed their opposition at the weekend said it could amount to disenfranchising the shareholders who reserve the right to attend the meetings and make contributions.
The COVID-19 has had significant impacts on the economies of countries all over the world particulary in the performance of stocks, jobs or emerging markets. In addition, the pandemic has led to the creation of emergency lifestyle adjustments especially with the partial or total lockdowns instituted in several countries. Thus, with the rising concerns around the spread of coronavirus globally, some public companies already postponed their annual meetings while some decided to hold the meetings via proxy, due to health concerns or partial lockdowns often prohibiting public gatherings.
It is imperative to note that an AGM is a meeting of the general membership of an organization. These organizations include membership associations and companies with shareholders and these meetings may be required by law or by the constitution, charter, or by-laws governing the body.
On the other hand, a virtual AGM is an AGM conducted over the internet entirely through computers and/or other electronic means and with no physical convergence of parties.
According to the Companies and Allied Matters Act (CAMA), the Cap C21 laws of the Federation of Nigeria, 2004, stipulates that all statutory and annual general meetings shall be held in Nigeria.
The notice calling for such meetings shall also contain the venue for the meetings. This means that the use of the word “shall” as employed in the CAMA indicates an imperative command; a duty to do and so the law therefore expects every annual general meeting to be held in Nigeria. Although the CAMA prescribes where a statutory meeting or an AGM must be held – in Nigeria, but it does not clearly prescribe the mode of conducting such meetings i.e. whether such meetings have to be physical or virtual.
Also, the recent guidelines released by the Corporate Affairs Commission (CAC) on proxy AGM stipulated that any investor who was not willing to attend the meeting could appoint a representative. Hence, some companies believed that the CAMA law did not expressly forbid any mode of conducting a statutory or annual general meeting but permits all modes of conducting a statutory or annual general meeting (whether physical or virtual) so far all the requirements of the CAMA on notices, quorum, voting etc are complied with.
So far, five financial institutions – Access Bank, FBN Holdings, FCMB, Guaranty Trust Bank (GT Bank)and United Bank for Africa (UBA)have held meetings albeit only two out of the aforementioned banks used virtual technology while the others had physical presence with limited number of individuals allowed into the hall.
Furthermore, it is believed that having a virtual meeting presents opportunity to lower costs as the physical meeting clearly involves huge transaction cost not forgetting logistics and accommodation cost for some shareholders living outside designated venues of the meetings. But in separate telephone interviews with Daily Sun, market stakeholders are of the opinion that the on-going yearly meetings of listed firms contradicts the stipulated guidelines and does not address investors concern.
According to them, AGMs remains the statuory recognised platform for owners of the business to ask management of the board on how well they have managed their resources while adding that virtual meetings still remains a far fetched perfect dream considering that internet penetration is still low in the country.
Stakeholders’ reactions
Nona Awoh, an independent shareholder, said, the essence of an AGM presents an opportunity for companies to render account and in rendering accounts, the meeting should be accessible to shareholders.
Awoh noted that although the coronavirus pandemic has provided the opportunity to put the virtual technology into use, some companies might decide to abuse it.
He said: “If you read the approval or guidelines that was given by CAC, they are not in agreement of virtual meetings. When people talk of about cost of AGM, what is the cost of AGM vis-a-vis the total cost of running the company?
For me, it is not significant but that itself is not to say that not anybody who attends the AGM of the company is ready to take on the managers of our resources on as to how they are managing it but an AGM remains the statuory recognised platform for owners of the business to ask management of the board on how well they have managed their resources”.
Also speaking, the National President, Progressive Association of Nigeria, (PSAN), Boniface Okezie, said,the virtual meeting option was clearly not stated in the law of CAMA while adding that even in the face of the meetings by proxy or virtual technology, some of these companies failed to provide links for shareholders to join the meetings.
“This one just came from an emergency situation as this was not what was planned for. Even CAC were relunctant to approve the AGMs because it was not in the status quo or CAMA in which we are operating in. As long as there has not been amendment to the law of CAMA, then there is nothing of such called Virtual Meetings. But then, it is noteworthy to point that companies should not abuse these things as CAC approved physical meetings with limitations which is enshrined with what the Lagos State Government talked about in ensuring that spread of the virus is reduced”, Okezie said.
According to him, “a lot of these shareholders were disenfranchised due to virtual meetings which i think would result to some of these companies perpetuating illegalities which could have seen shareholders challenge it. After the pandemic, we cannot do this same type of meeting because to get technology to continue involves a lot of money and i cannot advise companies to start spending on technology from investments made from the shareholders.