Lighthouse Morrow Sodali
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The Role of Investor Relations in Annual General Meetings and the Significance of AGMs in Shareholder Relations
Annual General Meetings (AGMs) are one of the most important events on the corporate calendar, providing a stage for companies to engage with their shareholders, discuss key business matters, and showcase their strategic direction. Within this framework, Investor Relations (IR) facilitates effective communication between the company and its shareholders, ensuring transparency, trust, and alignment of interests.
Renata Oliva Battiferro
Chairman of the Board of Directors, Brazilian Institute of Investor Relations (IBRI)
Luiz Henrique Valverde
CEO, Brazilian Institute of Investor Relations (IBRI)
Observing the evolution of AGMs over the years, more and more companies are being forced to pay closer attention to their AGM procedures. Not only international but also domestic investors are demanding better performance from companies in terms of corporate governance, ESG disclosures, and shareholder engagement. We also note an increase in investor participation in General Meetings in Brazil, which could be mainly explained by the facilitation of participation through remote voting ballot adoption (Boletim de Voto à Distância or BVD), created in 2015 by the Securities and Exchange Commission of Brazil (CVM).
The Role of Investor Relations in AGMs: Investor Relations professionals act as the primary link between the company’s management and its shareholders, serving as sponsors for transparent communication and shareholder engagement. They are responsible for coordinating the entire process in the AGMs, from drafting the agenda and preparing the necessary documents to facilitating Q&A sessions and addressing shareholder inquiries.
IR is also responsible for ensuring that shareholders are well-informed about the company’s performance, strategy, and governance practices to enable them to make wellinformed decisions and actively participate in the meeting, ensuring that the meeting is conducted smoothly and efficiently. In addition to the IR role, the dynamics of the AGM include coordinating with legal and compliance teams the regulatory requirements, managing logistics such as venue definition and technology setup (considering the adoption of virtual-only and/or hybrid meetings), and providing support to the board and executive team during the meeting.
Importance of AGMs in Shareholder Relations: AGMs serve to strengthen shareholder relations, providing opportunities for them to interact directly with the company’s management, discuss their concerns, exercise their voting rights and to gain insights into the company’s strategic priorities, corporate governance practices and financial performance. Through the AGMs, shareholders can enhance their confidence in the company and in the management. On the other hand, by engaging with shareholders, companies can also build trust, mitigate potential conflicts, and strengthen their reputation in the market. This demonstrates a commitment to open dialogue and engagement between the company and its shareholders.
From a regulatory perspective: AGMs play a critical role in upholding corporate governance standards and ensuring shareholder democracy. By providing shareholders with the opportunity to vote on key matters such as board elections, executive compensation, and major corporate transactions, AGMs empower shareholders to actively participate in the decision-making process and hold the company accountable for its actions.
“By ensuring transparent communication, facilitating shareholder engagement, and upholding corporate governance guidelines, IR professionals contribute to the effectiveness and credibility of the AGMs.” Renata Oliva Battiferro Chairman of the Board of Directors of IBRI – Brazilian Institute of Investor Relations – & IR General Manager of Gerdau
Trends and challenges: The Investor Relations department must be kept informed on several trends and challenges in annual general meetings (AGMs). Some of them include:
- Digital: The trend of holding AGMs virtually has increased, bringing challenges related to cybersecurity, accessibility, and shareholder engagement.
- Shareholder Engagement: Increased shareholder engagement requires a proactive approach to understanding and addressing their concerns, which can be a logistical and strategic challenge.
- Free Float Activism: The adoption of cumulative voting processes has been increasing, resulting in free float nominees being elected for seats on boards of directors.
- Sustainability and ESG: Shareholders are increasingly interested in sustainability and corporate governance practices, demanding more transparency and accountability in these areas during AGMs.
- Technology and Innovation: Using technologies such as artificial intelligence and data analytics can optimize the preparation and conduct of AGMs, but also presents challenges in terms of compliance and security.
- Governance and Compliance: Compliance with evolving regulations and standards is an ongoing challenge, especially in complex regulatory environments.
- Transparent Communication: Shareholders’ expectations regarding transparency and effective communication continue to grow, requiring a strategic approach to ensure trust and credibility.
- Diversity and Inclusion: Gender, ethnic, and skill diversity are becoming a priority for many investors, which may require changes in recruitment practices and board composition.
- Market Volatility: Economic fluctuations and market volatility can affect the atmosphere of AGMs and influence shareholder expectations and voting decisions.
“IR Professionals play a pivotal role during AGMs using this process as an opportunity to strengthen the relationship with shareholders, maximizing their engagement with the company´s strategy and ultimately contributing with reputation build-up.” Luiz Henrique Valverde CEO of IBRI – Brazilian Institute of Investor Relations
Therefore, when preparing for AGMs, it is important to be aware of these trends and challenges, adapting strategies and practices to ensure effective and successful conduct of these important meetings. In that regard, as companies continue to prioritize stakeholder engagement and transparency, and this is critical, AGMs will remain an indispensable forum for shaping shareholder relations and driving long-term value creation. In this process, IR plays a pivotal role in successfully orchestrating the AGMs