The Companies Act 2016 requires every company to hold an annual shareholder meeting. Traditionally, these meetings take place at a physical location where shareholders can attend. Currently, many listed companies are preparing to convene and host their annual general meeting. However, in light of the Covid-19 pandemic and the Malaysian Government’s Movement Control Order (MCO), where large meetings and gatherings are not allowed, how will these listed companies hold their usual physical annual general meetings?
In response to the Covid-19 outbreak, the Securities Commission Malaysia (SC) issued a Guidance Note on 18 April 2020 on the Conduct of General Meetings for listed issuers (companies) to conduct fully virtual or hybrid general meetings during the MCO period.
THINGS THE LISTED ISSUER SHOULD TAKE NOTE OF WHEN CONDUCTING A VIRTUAL GENERAL MEETING *
1.The listed issuer’s constitution must permit the holding of general meeting with electronic participation or leverage technology. If the constitution of the listed issuer requires the general meeting to be organized at a physical venue, the listed issuer will not be allowed to organize a virtual meeting. Instead, the listed issuer may apply for an extension of time to conduct its general meeting at a later date.
2.When conducting the fully virtual general meeting, the Chairperson need to be physically present at the broadcast venue ** i.e. the main venue of meeting in Malaysia. Further, only up to 8 essential individuals*** are allowed to be physically present at the broadcast venue. However, if the Chairperson of the meeting is not in Malaysia, the meeting cannot proceed unless the members or directors – whichever is specified in the constitution – elect one of their members who is in Malaysia to be the Chairperson of the meeting.
3.The notice of meeting can be circulated electronically to its shareholders, provided that the listed issuer’s constitution allows it.
4.The quorum of the meeting can be determined by the number of members logged in at the start meeting for a fully virtual general meeting. As for a hybrid general meeting, the quorum can be determined by the number of physical attendees at the meeting and members logged in at the start the meeting.
5.Voting – online voting process must be able to allow members to cast their votes during the proceeding of the general meeting or via proxy forms appointment for the Chairperson of the meeting to vote on behalf of the members. The proxy form should be submitted within the stipulated time and through a manner as determined by the listed issuer.
6.The listed issuer shall also ensure that the shareholders can submit their questions prior to the scheduled virtual general meeting, within the stipulated time and through a manner as determined by the listed issuer. Further, the listed issuer shall also ensure that the shareholders are given the opportunity to ask questions by means of electronic communication during the virtual general meeting.
ADVANTAGES OF VIRTUAL GENERAL MEETINGS
1.Save money for the company as a virtual general meeting is generally less expensive to host.
2.Save travel costs for the shareholders to physically attend the meetings.
3.The anonymous question format may encourage the shareholders to ask more difficult questions than they would at an in-person meeting.
4.A virtual meeting is typically recorded and archived. Thus, it can be replayed by the shareholders who could not participate during the live session.
DISADVANTAGES OF VIRTUAL GENERAL MEETINGS
1.Shareholders or investors may feel that there is limited shareholder engagement when the meetings are conducted virtually, since there is no physical interaction with the listed issuer’s executives or board.
2.Shareholders may be concerned that the company might randomly pick the audience’s questions to avoid answering the tough questions/issues.
3.Shareholders may not be comfortable with using technology to participate in the virtual general meeting.
4.Shareholders who are not familiar with the technology may not be able to participate in the virtual general meeting.
IF THE COMPANY WISHES TO CONDUCT A FULLY VIRTUAL GENERAL MEETING, THE COMPANY MAY CONSIDER:
1.Ensure all shareholders have equal access to discuss or raise any questions among themselves.
2.Ensure that the shareholders can interact with board members virtually by allowing the shareholders to see and hear the board members.
3.Ensure the platform used by the company can accommodate the number of attendees for the meeting.
4.Establish rules of conduct which include procedures and steps taken to be transparent.
5.Establish guidelines for the process of posing questions (e.g. timelines and limits for questions etc.)
6.Ensure the virtual general meetings are archived for future viewing.
Speak to us should you have any queries relating to this or issues relating to the Companies Act 2016 in view of Covid-19.
This publication is intended for our clients’ general information only and should not be taken as legal professional advice. If you have any questions or require advice based on specific facts, please contact us.
* [ Guidance Note on the Conduct of General Meetings for Listed Issuers dated 18 April 2020 and revised on 23 April 2020 issued by Securities Commission Malaysia.]
** [ A broadcast venue refers to a physical venue in Malaysia where the Chairperson of the general meeting is physically present. The essential individuals may also be present at the broadcast venue to facilitate the conduct of a fully virtual general meeting. ]
*** [ Essential individuals include the Chairperson of the general meeting, the Chief Executive Officer, the Chief Financial Officer, the company secretary, the auditor, the scrutineer and those providing audio and visual support for the fully virtual general meeting.