Virtual AGMs save firms millions


Listed companies are saving between Sh10 million to Sh15 million by hosting annual general meetings online which became the norm in the wake of the Covid-19 pandemic which saw a prohibition of large gatherings.

A survey of public relations companies that help corporates host events puts the average cost of generating annual reports, hosting 500 people, offering giveaways, hiring locations, and documenting the occasion costs at about Sh10 million.

Content development which could take three weeks and involves paying a creative team to design and print annual reports is the highest cost.

Companies also pay for hiring the venue, event management that includes photography, videography, and sound as well as a typical gift pack.

The Capital Markets Authority (CMA) authorised listed firms to hold virtual meetings in the wake of the pandemic. It is expected that companies could hold hybrid AGMs in the coming years once the pandemic subsides.

Companies are however opting for virtual meetings as a permanent feature because they cost less.

“There are savings. I am not sure about the amounts but just from a layman's perspective, there is no spending on items like hotels, gifts, food, and transport. Almost all listed companies stopped printing their annual reports, a trend that started in 2018 before the Covid-19 pandemic,” an executive at one of the share registrars told Business Daily.

The listed firms have changed their articles of association to allow for virtual AGMs, recognising remote participation by shareholders and directors through telephone and video calls.

The costs of virtual meetings are lower since companies do not have to hire venue and can circulate the annual report online.

Registrars are charging companies for organising the virtual AGMs whose costs may include hiring a studio and tech team. Some firms have cut costs further by holding the AGMs in their offices.

“Companies tell us that they prefer virtual AGMs which also offer the benefit of expanding access and participation by shareholders all over the world,” the executive said.

To hold virtual annual general meetings, companies must however convince the CMA that shareholders are well informed, can ask questions and vote in a transparent manner.

CMA issued guidelines for such meetings through a circular to listed firms outlining that the companies must make full disclosures to demonstrate how shareholders can access, ask questions and reliably vote in real-time.

“We are collaborating with issuers of securities to the public to ensure that shareholders are provided with adequate information to help make informed decisions in line with our investor protection mandate,” said Wyckliffe Shamiah, the chief executive of CMA.

In the West, online voting at AGMs has taken root since the Coronavirus outbreak as investors shun large gatherings because of travel restrictions or fear of infection.

The absence of physical meetings has removed one of the key elements of corporate and investing culture, especially for small shareholders.

Nairobi’s central business district, which used to host most of the AGMs, would be filled with individuals laden with merchandise and moving from one meeting to another between May and June when the events would be concentrated.

Some attendees, including retirees, would travel from different parts of the country to participate in the meetings.

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