Virtual shareholders’ meeting to be the new normal?

By Doreenn Leong

HOLDING virtual shareholders’ meetings will likely be the new normal for many public listed companies (PLCs) as the Movement Control Order (MCO) which took effect from March 18, had effectively stopped many PLCs from carrying out their general meetings as scheduled.

But will all PLCs be able to do so as conducting such meetings may not be specified in their constitution and as such, they will have to hold the meetings physically.

“By now, most if not all PLCs would have changed their constitution to allow meetings using technology, i.e. conduct virtual general meetings.

“There was a deadline set by Bursa for amending PLC’s constitution subsequent to the change of the Companies Act 2016,” said a company secretary of a PLC.

For PLCs which have yet to amend their constitution to allow meetings using technology, they will have to call for a physical meeting to seek shareholders’ approval to do so.

But such physical meetings will be impossible during the MCO period and there is no telling if the order will be further extended given the uncertainties caused by the Covid-19 outbreak.

The Securities Commission (SC), in view of this new norm, is already expediting guidelines for holding virtual general meetings, said its chairman Datuk Syed Zaid Albar.

In the virtual press conference on April 16, the SC said it will facilitate and encourage where necessary for PLCs to conduct fully virtual or hybrid AGMs during the MCO.

Virtual AGMs or Remote Participation and Voting (RPVs) are advocated by Practice 12.3 of the Malaysian Code on Corporate Governance.

Bursa Malaysia Bhd, Sunsuria Bhd, CAB Cakaran Corporation Bhd and Wellcall Holdings Bhd were among the companies which were supposed to hold their annual general meetings in March but had to postpone them due to the MCO.

Bursa had postponed its 43rd AGM scheduled on March 31 to April 29, which will be a hybrid meeting as it will be conducted at Connexion Conference & Event Centre in Bangsar South, KL as well as via RPV facilities.

The MCO was originally slated to end on March 31 but has been extended twice to April 28. This means more AGMs of listed companies had to be rescheduled.

Among the companies which called for AGMs in April are British American Tobacco (Malaysia) Bhd, Westports Holdings Bhd, KLCC Property Holdings Bhd and Malakoff Corporation Bhd.

Westports, which was supposed to hold its AGM on April 22, will be postponing the meeting and will be conducting it virtually.

Its managing director Datuk Ruben Emir Gnanalingam told FocusM: “We are actually going virtual but may have to postpone the date slightly to allow investors time to prepare to go online.

“We are doing it virtually because of the need for social distancing so it is likely we would continue as long as there is a need for social distancing. But we only have one grey area regarding how to conduct the AGM/EGM. Do we have to answer irrelevant (prank) questions that are typed out by potentially irresponsible shareholders? If best practice suggests that we have to answer all questions, what do we do if one shareholder continuously asks irrelevant questions which prolong the meeting unnecessarily?” he added.

According to High Court of Malaya advocate & solicitor Philip Koh, Section 340 of the Companies Act provides that a company is statutorily obliged to hold an AGM within six months from its financial year-end.

He added that no application is needed for a company to extend the date of the AGM as long as the rescheduled meeting is held not more than 15 months from the date of the financial year-end.

If the date is to be extended further, an application would have to be made to the Companies Commission Malaysia (SSM).

As it is, any deferment of AGM will have serious implications as PLCs need to obtain shareholders’ approval on various matters including election or re-election of directors, remuneration of directors as well as distribution of final dividends.

Holding virtual meetings may be advantageous for PLCs as they can save costs of hosting an AGM. But does this mean more PLCs will do away with physical general meetings and go fully virtual?

“Once social distancing is no longer a norm, we may decide to continue depending on how popular it is vs how much it costs. It may not be worthwhile to do just for one or two shareholders,” says Westports’ Ruben. — April 17, 2020

Subscribe and get top news delivered to your Inbox everyday for FREE