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    Investor Relations During the Corona Crisis: The Implications for AGMs

    Rules, actions and new approaches


    The coronavirus is spreading at pace across Europe. The number of new infections has risen rapidly in the last few days, causing panic on the stock markets and growing uncertainty. More and more countries are now putting emergency measures in place.

    Trade fairs and conferences are being cancelled. Companies are placing restrictions on business trips and many are banning them altogether, asking their employees to work from home or to self-quarantine. One coronavirus case at a company can create turmoil and is hard to prevent, even if a company takes all precautionary measures, as the New York Times reported on Microsoft and HSBC.

    Working from home during the corona crisis

    Alternative forms of work such as remote working are seeing a boom and should help to minimize the risk of infection among employees. However, those at management level have responsibilities to their employees alongside ensuring the company's performance. The UK Advisory, Conciliation and Arbitration Service (ACAS) provides information on the duties of employers when asking their staff to work from home.

    Deadlines and consequences of an AGM postponement

    Investor relations departments are facing a major challenge. The annual reporting period is beginning during this pandemic. In addition, companies are getting ready for their AGMs. While it is possible to broadcast the annual press conference exclusively on the Internet without offering an accompanying in-person event, this option is not (yet) available for AGMs.

    The largest FTSE corporations have in the past had several thousand attending their shareholder meetings which must take place within six months of the year end. Whether these major events, which are a legal obligation, can take place as planned in view of the coronavirus spread is something that nobody can answer at the moment. What we do know is that many countries have ordered that meetings and events bringing people together should be cancelled.

    UK law firm Clifford Chance explains in their paper “Coronavirus: Implications for AGMs” the consequences of postponing an AGM and the deadlines companies need to meet.

    ESMA: Business as usual

    The European Securities and Markets Authority (ESMA) has stressed, among other things that in light of the corona crisis financial market participants should be ready to apply their contingency plans including deployment of business continuity measures, to ensure operational continuity in line with regulatory obligations. Issuers are still required to meet their obligations, even during these unprecedented times.

    It‘s time for hybrid (and maybe more)

    So perhaps the time has come for a new approach. Kerry Leighton-Bailey writes in the Lumi Blog that companies should be preparing for a hybrid AGM – giving shareholders either the option to join online from wherever they are in the world, or to attend the physical, in-person meeting. In reality this may mean that the physical meeting still goes ahead as originally envisaged but that the majority of shareholders attend online. It’s possible that companies may need to conduct entirely virtual meetings which, while under normal circumstances could lead to legal issues. This might be the only option during this ever-changing period.

    In any case, companies should do everything possible to ensure that the shareholders' meeting is conducted in line with regulations. Hybrid and in some instances fully virtual AGMs should be seriously considered.

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    March 17, 2020
    March 17, 2020