For most large companies, digital general meetings are basically a possibility. Their challenges can be mastered with FOM software.
An Editorial of the FOM Magazine
Digital AGMs have evolved from a stopgap solution during the Corona crisis to a serious alternative. More and more companies are opting for the digital or hybrid option even after the pandemic.
The legal basis for this was provided by a special regulation for digital general meetings introduced in the wake of the COVID pandemic. As this regulation expired at the end of August 2022, the Bundestag passed a law in July making the online variant a legitimate permanent option.
This means that Germany's 14,000 stock corporations will continue to have a choice between face-to-face, hybrid and fully digital meetings. The new regulation is also to be extended to the general meetings of cooperatives.
But what do the companies actually say about it?
53 percent consider digital general meetings
In a study, communications consultancy Edelman Smithfield and law firm Taylor Wessing, which specializes in business law, surveyed 82 listed German companies regarding the new opportunities. The results were mixed:
- 53 percent of the groups are considering a virtual AGM in principle in the future.
- 6 percent say a virtual AGM would not be an option for their company.
- 47 percent have reservations about the digital-only option.
- 75 percent want to choose between digital or face-to-face events based on the situation.
- 50 percent would like to wait for a "best practice" to be established before making a decision.
Concerns about digital general meetings
On average, the Digital Shareholders' Meeting Act is rated 5.25 on a scale of 1 to 10 (very good). Respondents expressed the following concerns in particular:
- Technical risks: The main issues mentioned here were fluctuating Internet stability and the operation of the digital tools by individual participants. Above all, respondents were concerned that older participants might be overwhelmed by the tools.
- Effort: The organizational effort of hybrid assemblies is perceived as disproportionately high.
- Legal certainty: Despite the new law, some respondents expressed concerns about legal certainty.
Technology test for digital general meetings
In the run-up to a digital AGM, a technology test is usually carried out, whereby on the one hand the setup is tested on site, but also the participants can test the connection to their end devices.
Such a tech test was specifically requested by 45.5 percent of respondents, according to the Edelman and Taylor Wessing study.
All participants receive a secure link and instructions on how to use the tool in advance. The explanations are kept simple so that even users with little technical understanding can dial in for the shareholder meeting.
FOM software reduces organizational effort
The effort required for a hybrid AGM is not necessarily higher than for a face-to-face meeting. On the contrary, it is true that a technical setup has to be organized in addition to the face-to-face event. However, the use of these digital tools also simplifies the organization of the face-to-face event.
For example, invitations can be sent out at the touch of a button via a central participant directory, including voting rights. Representation rights can also be managed digitally instead of sending masses of letters or emails back and forth.
If participants and speakers are prevented from attending at short notice due to a traffic jam or illness, they can simply be added digitally.
The use of digital tools can therefore significantly reduce the organizational effort of the face-to-face event - especially if you have already used the technical setup once and can simply reuse it the next time.
Legal certainty of digital general meetings
In terms of legal certainty, the new law has already regulated many details. The legal basis therefore exists. FOM tools are designed to comply with these legal provisions and the rules in the respective articles of incorporation.
For example, FOM software includes legally compliant tools for voting and elections, and produces minutes that comply with the bylaws and prove the presence of participants, including the quality of their Internet connection.
The future of the Annual General Meeting is digital
The survey shows that the digital AGM has come to stay. Only six percent of respondents still rule out the digital variant in principle. The remaining 94 percent have reservations, but no points were listed that could not be solved by appropriate software.
As always, new concepts and technologies must first establish themselves and conquer their teething troubles. But that is only a matter of time. Companies will increasingly take advantage of digital formats. They are more cost-effective, more efficient, faster to organize, and hedge against risks such as being prevented from working due to illness, weather conditions, or traffic jams.
They also help protect the environment and increase shareholder inclusion, as participants can easily connect from all over the world.