General Assembly - Quo Vadis?
Technical and legal developments enable the separation of the formal from the social shareholder event
Formal and social parts of the General Assembly
The general meeting of shareholders is the supreme body of a stock corporation. Its powers include, for example, the adoption and amendment of the articles of association, the election or discharge of the members of the board of directors and the auditors, the approval of the annual financial statements or the determination of the dividend. However, the term general meeting is not only understood to mean the decision-making body, but also the event itself, which under the old law had to take place at a physical meeting place. Since the general meeting is required by law and gives shareholders the opportunity to help shape the fate of the company, it is an important event in its annual calendar.
The AGM is not only an important decision-making body, but also an important social event for the company, as it can help to retain shareholders. Most general meetings of medium-sized and large companies are concluded with an aperitif or buffet where shareholders can exchange ideas and network.
Companies can also use the AGM to showcase their brand and attract shareholders as customers and brand ambassadors. Companies often give their shareholders small gifts or samples to express their appreciation and gratitude.
Prize for a high participation rate
Of course, the aperitif, buffet, gifts and goodies serve not only to show appreciation, but also as an incentive for shareholders to make the journey, the time and the expense of getting there in the first place. In this way, stock corporations aim to achieve a high participation rate, suggesting that attending the purely formal general meeting would not be nearly attractive enough for all shareholders to go to the trouble of doing so. A high participation rate strengthens the bond with the company and provides the basis for broad-based shareholder support for operational and strategic activities.
In the past, however, the external framework conditions of a general meeting were not very suitable for designing the second, informal and social part of the event as investor events that remain in shareholders' memories and bind them emotionally to the company.
General meetings are regularly held in boardrooms or conference halls, which are usually not the best places to create a pleasant, relaxed atmosphere for the social part of an event. These spaces are usually functional and professional, but not necessarily welcoming or cosy.
In summary, this means that the formal part of AGMs is too uninspiring for many shareholders to put in the effort, and the second, social part was not attractive enough to be remembered as an exceptional event.
More freedom thanks to technical means and legal development
Modern technological achievements and legal developments make it possible to hold general meetings as virtual events, which offers opportunities for both the formal and informal parts: The ability to attend a general meeting online from home, office or on the road using technological means lowers the barriers to participation. This increases shareholder participation and strengthens the transparency and accountability of the company.
Formal and social shareholder events of the future
A social event separate from the formal part can offer companies the opportunity to build a more personal relationship with their shareholders and retain them. By eliminating the reliance on boardrooms and conference rooms, such an event can be held in an attractive location that is specifically suited to the social aspect of the shareholder event. Attendees could be invited to participate in a variety of activities beyond what is possible at a formal general meeting. These could include, for example, presentations by company officials, tours of factories or production facilities, networking events, cultural events, barbecues and garden parties, sports activities or workshops.
Stock corporations can still give their shareholders goodies and gifts, but they can send them by post and time them according to production, storage capacity, prices or seasonality.
Conclusion
The possibility of holding general meetings virtually opens up new opportunities for companies to increase the participation rate of shareholders and strengthen the transparency and accountability of the company. In addition, the separation of the formal and informal parts of the AGM could allow companies to design the social part as an investor event that binds shareholders more personally to the company.
We will be happy to advise you on the organisation and implementation of your virtual or hybrid general assembly.
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