The Institutional Shareholder Services (“ISS”) has published a consultation document seeking views on certain of its proposed benchmark voting policies for 2018. Of relevance in the UK and Europe is the “UK/Ireland Policy and European Policy – Virtual/Hybrid Shareholder Meeting Proposals”.
As the title suggests, ISS is considering (i) “hybrid” meetings, that is where shareholders can attend a physical meeting of the company in person or elect to participate online; and (ii) “virtual-only” meetings, that is where shaeholder meetings are held entirely through online participation with no corresponding physical meeting taking place.
ISS notes that whilst many investors recognise the potential benefits of enabling online participation, others are concerned that by completely eliminating physical shareholder meetings, virtual meetings may impede meaningful exchanges between management and shareholders and enable management to avoid uncomfortable questions.
ISS’s position is generally to vote for proposals allowing hybrid shareholder meetings and against virtual-only shareholder meetings.
As ISS observes, a company must seek shareholder approval to amend its articles of association if it wishes to hold either hybrid or virtual-only shareholder meetings.
Whilst ISS will accept any comments on its position, the main thrust of its consultation is this:
On the assumption that investors would be willing to support virtual-only meetings provided that they offer the same shareholder rights as a physical meeting, what rationale or assurances would investors require for them to support changes to the articles of association allowing for virtual-only shareholder meetings?
Comments should be submitted by 9 November 2017, with ISS expecting to apply the revised policies to shareholder meetings on or after 1 February 2018.