Shareholders in Sweden are now having a tougher time forming opinions about proposals being put to the vote at company annual general meetings (AGMs) – because of pandemic-linked emergency changes to the way meetings are held, according to Swedish national pensions buffer fund AP4.
Commenting after last week’s release of its 2020 AGM report, the SEK403bn (€38.7bn) fund said COVID 19 restrictions on public gatherings and temporary legislation allowing postal voting in advance had entailed challenges for shareholders wanting to participate actively, and for the company boards.
Arne Lööw, AP4’s head of corporate governance, said: “One example is that it has been more difficult to ask questions and have a dialogue with the board about shareholder proposals, and thus more difficult for other owners to make their own assessment of the proposals.”
AGMs in the first half of this year had been characterised by the pandemic, the pension fund said, with meetings having largely been conducted by postal voting in advance, and in a few cases also providing the opportunity to vote in real time but at a distance.
The Swedish Public Health Agency’s introduction of restrictions had a major impact on the AGM season, it said, with many companies postponing their meetings to a later date in the hope that the restrictions would be eased by then.
To make it easier for companies, AP4 said the Swedish parliament (Riksdag) introduced two temporary amendments to the law regarding general meetings.
One of these meant that all companies gave shareholders the opportunity to vote by post in advance, so they did not have to physically attend the meeting, and the second made it possible to conduct general meetings entirely by postal vote, without the physical presence of shareholders, according to the pension fund.
In its report, AP4 said that while postal voting allowed shareholders who could not attend to vote, at the same time, they lost the chance to ask the company questions directly.
“One way forward that combines physical presence with postal voting is the form of hybrid meetings that some companies have conducted,” it said.
In this way, the Stockholm-based buffer fund said, owners could participate without being physically present and have the opportunity to vote remotely in real time.
“It is becoming clear that general meetings need to be conducted with the board in place when the notice convening the general meeting contains shareholder proposals,” AP4 said.
In order to have a solid basis for their decisions, the buffer fund said shareholders depended on company boards giving their view and preferably a recommendation on proposals.
“Unfortunately, Swedish company boards generally fail to give their views on these proposals in advance, which makes it difficult for shareholders to make their own assessment of the proposal,” AP4 said in the report.