Nairobi bourse listed firms plan to automate voting
Barclays Bank of Kenya shareholders at an AGM. With electronic voting, companies will engage shareholders more in decision making. File
Companies listed on the Nairobi Stock Exchange (NSE) plan to move to automated voting during their annual general meetings. Custody and Registrar Services Limited, a share registrar of 18 listed companies accounting for more than 33 per cent of the market, plans to offer electronic voting to its clients.
Polls at AGMs are usually a lengthy process involving manual counting of ballots while putting in consideration the shareholding of each vote, leading to results being released days after the meeting.
The introduction of electronic voting will hasten the process, enabling shareholders to save on time and cut cost.
“The administration of AGMs and share accounts is going electronic, largely driven by cost cutting measures. We will see electronic voting gain ground at AGMs of listed companies in coming years,” said Ms Kerry-Ann Makatiani, the company’s general manager.
The length and complexity of the polling process have seen most companies opt for a show of hands method to pass resolutions, limiting the voting power of large shareholders as one hand represents one vote unlike in the polling process where it is one share per vote.
With electronic voting, companies will engage shareholders more in decision making, improving on corporate governance.
“It will be more reliable, especially with the number of shareholders growing,” said Robert Bunyi of Mavuno Capital.
Mr Bunyi said companies usually communicate voting results within two to seven days.
Currently, firms are not mandated to conduct a formal poll on proposed resolutions but should do so on a shareholder’s request.
This clause has largely been exercised by majority stakeholders when they wish to exercise their control to dictate the direction a company takes.
However, governments are enlarging shareholders’ powers requiring a formal vote on all proposed resolutions at an AGM. As a result, electronic voting at AGMs of listed companies is being introduced all over the world, with Denmark’s VP Securities being the first to introduce the system.
It remains to be seen how the move will be accommodated in the Kenyan market where owners’ dynamics are different. With low literacy levels and mostly old shareholders, the simplicity of the technology will count a lot.
Security a concern
Security is also a concern, with stakeholders saying that technology would expose the voting processes to manipulation.
“When companies offer their shareholders the opportunity to participate Online at general meetings, it is important to ensure the robustness and security of the utilised technology,” said Ms Makatiani. The Companies Act will however have to be amended as it states that shareholders are required to be physically present or represented by a proxy.
There is also a verification process which requires shareholders to present their identification cards, Custom Depository System (CDS) certificates, or share certificates.
In a move meant to embrace technology, several listed firms sought to amend their articles of association to allow them to distribute annual reports electronically and alerts of annual meeting via SMS in this year’s meetings.
