The Securities Commission and Bursa Malaysia have, in a joint statement, said that all public listed companies (PLCs) must hold hybrid or physical general meetings. The requirement applies to all general meetings of companies on the Main Market and ACE Market. Virtual-only general meetings will be a thing of the past beginning March 1, 2025.
"Shareholder meetings, especially AGMs (annual general meetings), are important sessions to engage the board and management," said SC chairman Datuk Mohammad Faiz Azmi.
"Domestic and international investors have also expressed their preference for hybrid or physical meetings."
The Chief Executive Officer of Bursa Malaysia, Datuk Muhamad Umar Swift, committed the Exchange's full support of the hybrid approach as it strikes the right balance between accessibility and engagement. Physical meetings preserve shareholder rights and ensure no one is excluded due to technological barriers, he stressed.
"While virtual participation enhances accessibility, PLCs should strive to hold general meetings in a hybrid model or at least in a physical format," Umar said.
"This ensures meaningful shareholder engagement, safeguards shareholder rights, and upholds the integrity of the general meeting process."
Annual General Meetings (AGMs) are critical events for companies and their shareholders, where key decisions are made, reports are presented, and shareholder voices are heard. There are several compelling advantages of holding a physical AGM over a virtual one. These advantages stem from enhanced engagement, transparency, networking opportunities, and the assurance of inclusivity and security, among others.
Enhanced Shareholder Engagement
One of the primary advantages of a physical AGM is the level of engagement it fosters. There is nothing like meeting face-to-face. Physical presence encourages shareholders to participate more actively. The environment of a physical meeting is conducive to open discussions, allowing shareholders to voice their opinions and concerns effectively. Body language, tone, and immediate responses, which are often lost in virtual settings, can significantly influence the outcome of discussions and voting.
In a physical AGM, shareholders can gauge the reactions of other participants, engage in spontaneous conversations, and seek clarifications in real-time. This level of engagement is difficult to replicate in a virtual setting, where technology barriers, screen fatigue, and limited interaction can impede the flow of conversation.
With virtual meetings, questions are sometimes outright ignored. The hapless shareholder will be left pounding away furiously at his keyboard, often to no avail. Physical meetings empower shareholders to stand up and demand accountability.
Transparency and Trust Physical AGMs tend to foster a greater sense of transparency and trust. The face-to-face nature of these meetings allows for a more open exchange of information. Shareholders can directly interact with the company's management and board members, which can lead to a more candid dialogue. Seeing the key decision-makers in person helps build trust, as shareholders feel that their concerns are being heard and addressed in a straightforward manner.
In contrast, virtual AGMs can sometimes create a sense of distance and detachment. The lack of physical presence may lead to perceptions that the company is not fully transparent or is trying to avoid tough questions. Although this is not necessarily true, at least in the majority of cases, the physical setting of an AGM can help alleviate such concerns by making the company's leadership more accessible.
Leaders (directors) must be with the people (shareholders) and not distance themselves away virtually.
Networking Opportunities
A significant advantage of physical AGMs is the opportunity for networking. Shareholders, board members, executives, and other stakeholders can meet and interact informally before and after the official proceedings. This networking can lead to the exchange of ideas, the formation of alliances, and discussions that might not take place in a formal virtual setting.
The amount of goodwill that the directors gain through this process is substantial.
These interactions often lead to valuable insights and can foster a sense of community among shareholders. There is a camaraderie of sorts. Moreover, the informal conversations that happen during these events can help shareholders gain a better understanding of the company's strategy, culture, and leadership style. Networking opportunities are inherently limited in virtual AGMs, where interaction is often restricted to the formal agenda and does not easily extend to informal discussions.
Security and Integrity of the Voting Process
The voting process in a physical AGM is often perceived as more secure and transparent compared to a virtual AGM. In a physical setting, voting typically takes place in a controlled environment, where the process is overseen by independent auditors or scrutineers.
Shareholders can cast their votes in person, ensuring that the process is both secure and transparent.
In contrast, virtual AGMs rely heavily on technology, which can be vulnerable to security breaches, technical glitches, or errors. While companies take steps to secure online voting platforms, there is always a risk that the integrity of the voting process could be compromised. Additionally, some shareholders may not be as comfortable with online voting systems, leading to potential errors or confusion.
Managing complex issues and sensitive discussions
Physical AGMs are better suited for managing complex issues and sensitive discussions.
When a company faces significant challenges or controversies, having an in-person meeting allows for a more nuanced and effective handling of these issues. The management and board can address shareholders directly, gauge their reactions, and respond accordingly.
In a virtual setting, managing such discussions can be more challenging. The lack of physical presence may lead to miscommunication or a sense of disconnect among participants.
Complex issues that require detailed explanations and back-and-forth discussions are often better handled in person, where all parties can engage fully and effectively.
The regulators have got it right in reverting to physical AGMs. That which necessitated the virtual AGM is no more—Covid 19. As such, there should be a reversion to that which was pre-Covid 19.
The hybrid AGM remains the gold standard. Though more expensive, the shareholders are worth the expense of a hybrid AGM. They allow the company to get the best of both worlds.