The authors – from a law firm – explores the developing world of hybrid meetings among business owners, including shareholders, for annual meetings and other key gatherings.

In this age of modern digital communications, one area that technology is affecting is how shareholders and other beneficial owners in firms are able to wield their muscle. The digital age has implications for corporate governance. The mechanics of voting, expressing opinions and providing feedback from boards are changing. 

This news article comes from Piers Larbey and Izabella Brooks (both pictured below), of Hunters Law. The editors are pleased to share these insights and invite replies. The standard editorial disclaimers apply. Email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

Piers Larbey

Izabella Brooks

It is nearly a decade since Jimmy Choo (now Jimmy Choo Group Limited, a part of the Capri Group since their acquisition by Michael Kors Holdings Limited) became a digital pioneer: the first UK publicly listed company to host a virtual annual general meeting. Since then, a raft of prominent companies have shifted their AGMs online. Most recently, these include pharmaceuticals giant AstraZeneca, retailer Marks & Spencer Group, toothpaste maker Haleon, Nationwide Building Society, defence heavyweight BAE Systems, and luxury car maker Aston Martin Lagonda Global Holdings. 

Following their lead, a growing number of UK companies are now reconsidering their use of digital engagement, particularly when it comes to shareholder meetings. What was once an entirely in-person affair has evolved, making hybrid and virtual meetings increasingly commonplace. 

But digital simplicity creates complexity elsewhere: companies must balance convenience and accessibility with compliance and shareholder rights. Meeting these competing objectives requires careful navigation, with specific focus on how the AGM is formatted.

After becoming popular during the Covid-19 pandemic, hybrid general meetings are still the most prevalent due to their practical advantages; they allow shareholders to attend either physically or virtually, combining the benefits of face-to-face interaction with the flexibility of remote participation. 

By contrast, fully virtual general meetings that are conducted entirely online remain more contentious and even controversial. Uncertainty persists about whether such meetings can constitute a valid shareholders' meeting under the current legal framework which can be more nuanced than prescriptive.

The principal legislation, the Companies Act 2006, sets out the necessary requirements for a shareholder meeting to be validly held and voted in. It does not expressly prohibit hybrid or virtual meetings. Instead, the permissibility of entirely virtual meetings will depend heavily on the company’s constitutional documents, such as their articles of association (articles). if the company’s articles have not been amended or updated to reflect the advent of virtual meetings, they may be silent on the point.

Before holding a hybrid or virtual general meeting, it is therefore essential that companies review their articles to ascertain and confirm whether they are permitted. If not already permitted under the articles or if using model articles, a special resolution should be passed to adopt updated provisions. 

In addition to legislation and case law, bodies such as the Chartered Governance Institute (ICSA) provide further guidance which confirms that, where the articles do not prohibit virtual participation, hybrid meetings are generally permitted often with the requirement that individuals attend the meeting at a single location. Meanwhile, fully virtual meetings are only valid if they are explicitly authorised by the articles.

In practice, the global nature of international business has led many companies to amend their articles, permitting hybrid meetings and outlining procedural details of how they should be held, including what happens and potential remedies in the event of a technical failure.

A major concern for those arranging hybrid and virtual general meetings is the risk of undermining shareholder rights, particularly for minority shareholders. Key areas to consider include:

-- Notice of meeting requirements: these must clearly explain how shareholders can attend and participate, including login details and technology requirements; 
-- Equality of participation: virtual attendees must be able to ask questions and vote meaningfully; mere observation is not enough; and 
-- Technical failure: if shareholders are excluded due to technical problems, this could invalidate parts of the meeting or give rise to legal challenges. Best practice would include a dry-run of the technology, using a reputable platform with voting functionality, and providing clear instructions well in advance.

Proactive chair
A proactive chair is particularly important in a hybrid meeting to balance the input from physical and virtual attendees. This can be further underpinned by clear rules for asking questions, submitting resolutions, and dealing with connectivity issues. These should be circulated in advance. It is also an opportunity to modernise corporate governance culture, showing commitment to inclusivity, transparency, and shareholder engagement.

To prepare for hybrid or digital general meetings, companies should undertake practical steps:

-- Reviewing the articles to confirm their power to hold hybrid or virtual meetings; 
-- Updating the articles, if necessary, via shareholder resolution; 
-- Choosing the right digital platform, which ideally integrates video, live Q&A, and secure voting; 
-- Providing comprehensive AGM notices, detailing how shareholders can join and participate; and 
-- Training board members and the company secretary on hybrid meeting management.

The cultural shift towards hybrid meetings reflects broader changes to the ways businesses operate, particularly the shift towards more globalised and digitised business processes and governance. Done well, they can enhance stakeholder participation, reduce costs, and modernise corporate governance. 

For any business planning a hybrid shareholders’ meeting or reviewing its constitutional documents, legal compliance on corporate governance, shareholder rights, and meeting formalities remains paramount.