In August we wrote about the importance of giving adequate and sufficient notice of a general meeting. But what about once the meeting is underway? This post looks at best practice in facilitating debate and discussion at your company meeting.
Some companies attract more criticism than others, often owing to the nature of the business they operate. For example, companies which undertake fracking or those with less environmentally friendly processes are more likely to be subject to protests and demonstrators may see a general meeting as the perfect opportunity to show the company in a bad light.
A right to speak
Shareholders have a right to speak up and ask questions at a general meeting so it is important that they are given the opportunity to do so. But this right may be limited by the company’s articles of association and, in particular, by the rights attached to different classes of shares. It is best to review the articles to ensure the chair is clear on the rights of the attending shareholders.
The chair of the meeting is, of course, entitled to speak along with any of the company’s directors. The company’s auditors are also encouraged to speak about any matter which may concern them in their role in the company. At an AGM, the chairs of board committees (such as the Remuneration or Audit Committee) should be available to answer any questions specific to their role.
Rehearse, rehearse, rehearse…
No matter how senior an individual may be, the idea of speaking at a general meeting, often in front of a large audience, is daunting. Those individuals speaking will be under the scrutiny of the board and investors, and they may have to contend with tricky and probing questions from shareholders. It is worthwhile for the chair to rehearse before the meeting to ensure it runs smoothly.
Rehearsing also allows the venue to be tested fully before the actual meeting takes place. Microphones and sound systems can be checked and the room laid out in a suitable manner before the shareholders arrive en masse. A test run of the voting system can also be undertaken. The rehearsal is also an opportunity to pre-empt the questions which may come from shareholders and consider how best to answer these with authority and clarity.
Debate and discussion
Although questions can be submitted before the meeting to give the chair a chance to prepare, this does not mean that shareholders cannot ask questions at the meeting itself. It may be tempting to decline questions but this will be an abuse of the chair’s powers. The shareholders are entitled to discuss and debate the business being considered.
But there are various tools at the chair’s disposal to help manage a lively debate and to prevent disorder. For example, the chair can set out an order in which questions can be asked, moving more probing questions towards the end of the meeting so that a negative atmosphere does not adversely affect other resolutions yet to be considered.
The chair may also limit debate by:
- not replying: the chair is not obliged to answer a question, if he/she does not consider it to be in the best interests of the company but a refusal could alienate shareholders or lead to further dissent;
- limiting the right to speak: the chair must exercise discretion when limiting a shareholders opportunities to speak but could, for example, limit a shareholder to one opportunity to speak on each resolution;
- requiring debate at the same time: the chair can choose to deal with questions on a particular topic at one time, then refuse further questions later on the same topic; and
- ending the discussion: debate can be stopped if the chair believes it has run its course and that a fair proportion of the shareholders have had their say.
Dealing with disruptions
If disruption is expected the chair should take steps to minimise its impact. The rehearsal can help with this by identifying potentially tricky points in the meeting and enabling the chair to ‘hold their own’ when shareholders query a resolution or request information which the chair may not have to hand.
The chair could deal with unruly shareholders in a number of ways. They could adjourn the meeting until the disruption has calmed down or the shareholder has been ejected, but the other shareholders must consent to this adjournment. The chair’s duty to preserve good order allows any individual to be expelled if they are preventing the meeting from progressing. However, any ejection should be carried out using the minimum amount of force necessary and preferably with the agreement of the other shareholders. This reassures the chair that the meeting is on-side and should prevent any further disruption.
Effective management of, and good preparation for, a general meeting will allow a company to conduct its business in an efficient and professional manner. Keeping shareholders engaged and showing itself in a good light should mean the company benefits from future investment and can develop its business for the benefit of its wider stakeholders.
This blog post was written by Elliot Gibson. For further information, please contact Sophie Brookes:
Sophie Brookes, partner, Corporate team
T: 0161 836 7823