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Preparing For Your 2021 (Virtual) Annual General Meeting

(Originally published in BC Business)

For the second year in a row, public companies across Canada will need to think digital when planning their annual general meetings.

Last year, in response to the COVID-19 pandemic, companies were forced to hold their first-ever virtual AGMs with existing technologies that, while available in Canada for years, were scarcely used.

The transition to virtual meetings was a success and, regardless of COVID-19 restrictions in 2021, we expect virtual meetings' adoption to continue. According to a recent TMX survey of TSX and TSXV-listed companies, more than 85 percent of respondents are "very likely" or "likely" to add a virtual component to their shareholder meetings going forward.

Below is a summary of issues and best practices to consider when planning your virtual AGM.

Virtual meeting or Video/audio broadcast?

A virtual meeting platform enables a company to meet its regulatory requirement to hold an AGM and allows shareholders attending virtually to vote online on motions brought before the meeting and engage with management and board members.

It can take the form of a virtual-only AGM or a hybrid AGM, where shareholders have the option of attending the meeting in-person or virtually. This is especially important given the current situation with COVID-19. It is also relevant during a typical meeting season because it allows for broader participation and reduced carbon footprint due to less travel for board members and shareholders.

Alternatively, a video or audio stream of your in-person shareholder meeting — via Zoom or other technology — allows stakeholders to listen to or watch your meeting, but lacks the participatory elements of a virtual AGM.

Choosing a Virtual AGM Provider

We recommend contacting a virtual AGM provider early and booking your meeting well in advance.

In 2020, with only two major service providers in the marketplace — Lumi and Broadridge —, and the last-minute rush to replace in-person meetings with virtual options, some companies had difficulty scheduling their virtual meetings.

This year, we expect more service providers to enter the market, including TSX Trust Virtual Meetings platform. Our platform, customized for Canadian issuers, offers the ability to identify all attendees, live tabulation, Q&A communication and post-meeting reporting.

What do the proxy advisors say?

Larger companies and those with significant institutional ownership will need to consider the views of proxy advisors, Institutional Shareholder Services (ISS) and Glass, Lewis & Co., LLC (GL).

While ISS continues to voice investor concerns about virtual-only meetings, they will support virtual meetings provided that companies disclose the circumstances of why a virtual-only meeting is being held.

Both proxy advisors require robust disclosure in a company's proxy statement, which assures shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting — rights such as the ability to vote, ask questions, and access support in the case of technical difficulties.

Are you shareholder-centric?

As part of your ongoing shareholder engagement, consider seeking feedback about last year's AGM and solicit suggestions about your virtual meeting in 2021.

One of the arguments against a virtual meeting is that management could use it to avoid interaction with shareholders who may have tough questions. Issuers looking at using a virtual meeting should ensure that they are developing and following best practices that counteract these concerns.

Transparency is critical. In your meeting materials, disclose why the meeting is virtual and provide clear instructions about how shareholders, proxy holders, and guests can log in to the platform and access technical support. Make sure to include protocols and an agenda for the meeting and communicate this information in advance.

Make the Q&A process clear. We recommend providing shareholders with detailed instructions about asking questions. Using an independent moderator to manage the Q&A process is a powerful way to show your shareholders and attendees that no questions will be removed or avoided.

After the meeting, post all questions and answers on your website. If there are questions you can't answer — either because they are irrelevant or require disclosure — simply explain why. Some companies also publish a recording of their meeting online.

The necessity of adapting to digital meetings in 2020 has led to greater acceptance of virtual technologies. Issuers and traditional shareholders are recognizing the many benefits of virtual meetings, including cost savings, increased participation rates and environmental advantages. There's also a growing number of new shareholders — younger tech-savvy retail investors — who will demand more digital communication methods.

It looks like virtual or hybrid AGMs are here to stay.

Good luck with your meeting!

Lara Donaldson is Chief Operations Officer at TSX Trust, the largest Canadian-owned Transfer Agent and provider of Corporate Trust services.

This article is provided for information purposes only. Neither TMX Group Limited nor any of its affiliated companies guarantees the completeness of the information contained in this publication, and we are not responsible for any errors or omissions in or your use of, or reliance on, the information. This article is not intended to provide legal, accounting, tax, investment, financial or other advice and should not be relied upon for such advice. The information provided is not an invitation to purchase securities listed on Montreal Exchange, Toronto Stock Exchange and/or TSX Venture Exchange. Listing on Montreal Exchange, Toronto Stock Exchange or TSX Venture Exchange does not guarantee the future performance of a security or an issuer. TMX, the TMX design, The Future is Yours to See., Toronto Stock Exchange, TSX, and Voir le futur. Réaliser l'avenir. are the trademarks of TSX Inc.