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May 14, 2020

Standard Life suffers investor revolt over online shareholder meetings

Investment firm to engage with investors after special resolution rejected at AGM

Standard Life Aberdeen, the UK-based investment company, suffered a defeat at its AGM this week over plans to allow online shareholder meetings.

Investors cast just over 37 percent of votes against a resolution to adopt new articles of association, which would have allowed the company to call meetings where shareholders could attend remotely. Being a special resolution, it needed 75 percent approval to pass.

The vote underlines the contentious nature of virtual AGMs, even amid the Covid-19 outbreak where traditional in-person meetings are unable to take place due to lockdowns and social distancing guidelines. 

Standard Life’s AGM itself was held with very few physical elements: the company posted video presentations by senior management online and investors were asked to submit votes in advance of the meeting. 

In a statement, the company says it thought the special resolution would be ‘uncontroversial and appropriate’ but recognizes the size of the rebellion. 

‘We understand that some shareholders were concerned the company could and possibly would use the permission to hold ‘virtual’ meetings with no shareholders present,’ says the statement.

Standard Life says the company has ‘no plans’ to stop physical meetings but felt allowing virtual participation ‘would be in the interests of shareholders and allow engagement with those unable to travel to the meeting’. 

Under the company’s current articles of association, it is not permitted to hold so-called hybrid meetings, which would allow the use of videoconferencing and remote voting at AGMs, adds a spokesperson for the firm.

Standard Life now plans to engage with institutional investors on the issue and says it will report back in six months’ time, as recommended by the UK Corporate Governance Code.

ISS, the proxy adviser, had originally recommended a vote against the resolution on the basis that the changes appeared to allow for virtual-only shareholder meetings.

It then revised its opinion and supported the resolution after Standard Life confirmed the articles did not allow for fully virtual meetings. ISS also noted the company’s stated intention to continue with physical meetings. 

Many countries have adapted existing laws and guidelines to help companies meet their legal requirements to hold AGMs during the Covid-19 outbreak. In late March, the UK government said it would bring forward legislation to help companies hold remote meetings.

The Australian Securities & Investments Commission, meanwhile, has said it will not take action against companies that choose to hold virtual AGMs or postpone their meeting by two months.

In the US, where rules around shareholder meetings are managed at state level, the SEC has released guidance for companies planning virtual AGMs.