Permanent rules for Singapore listcos to continue virtual meetings a given, say pundits

PROVISIONS for virtual meetings are expected to kick in by the time temporary measures that made it easier for companies to hold them expire, say market watchers. They also hope the new rules will cover best practices that protect shareholders’ rights.

The Covid-19 (Temporary Measures) (Alternative Arrangements for Meetings) Orders were introduced in April 2020. They allow entities to hold virtual meetings temporarily, even if this was prohibited under any written law or legal instrument.

The orders were due to expire by September 2020, but were extended by the Ministry of Law in view of the continuing Covid-19 situation. On Dec 15, 2022, the ministry said the orders will cease on Jul 1, 2023.

Market watchers expected this, as Covid-19 was now less of a concern.

They said it would be appropriate for virtual meetings to be prescribed in the appropriate legislation.

Professor Mak Yuen Teen of the National University of Singapore’s business school sees the move as more administrative in nature.

“They were temporary measures to address the Covid situation,” he said. Amendments would need to be made to the Companies Act in order to make virtual meetings permanent, Prof Mak added.

The Accounting and Corporate Regulatory Authority (Acra) and Monetary Authority of Singapore (MAS) said in a joint statement last month that they are working on legislative amendments to provide companies, variable capital companies and business trusts with the option to conduct general meetings by electronic means after the orders are revoked.

Details of the proposed amendments are likely in early 2023.

Singapore Exchange Regulation (SGX RegCo) also said it will work closely with MAS to provide guidance for listed issuers to have the option to conduct hybrid meetings.

Market watchers expect the new rules for companies to hold virtual meetings to be ready before the temporary measures expire in July.

“The Singapore authorities are super efficient. I’m sure they will roll out everything in time,” said Stefanie Yuen Thio, joint managing partner of TSMP Law Corporation.

She expects the new guidance from SGX RegCo will fold in best practices for hybrid meetings; allowing shareholders to attend in person and also virtually, making both physical and virtual attendance the practice going forward.

While companies have had time over the past three years to adjust to virtual meetings, Yuen Thio said there are still important issues to address.

“It is important that shareholders have the full benefit of any discussions that take place at a general meeting before casting their vote, so where possible, there should be live voting,” she said.

“But live voting technology can be glitchy, so there’s always a risk that one or more shareholders who are not present at the meeting will have problems with the voting. The regulations should also cover such situations and set out the implications and requirements if some shareholders’ are unable to vote but where the voting system is generally working.”

Jason U, Asia managing director for share registry services and employee plans services at corporate services provider BoardRoom, said both physical and virtual meetings have their benefits and drawbacks.

“We expect early adopters and trailblazers of the hybrid setup to continue with this mode as they have realised the benefits of doing so,” he said. “For those that are still unsure about the benefits of a hybrid setup, we recognise that the one-off transition may seem daunting initially but will become second nature.”

Being too prescriptive with regulations could pose challenges, however, given the varied nature of the listed companies on the SGX.

“Given this diverse client segment, we ultimately believe the issue of shareholder engagement needs to be looked at holistically and not centred around the solutions for the format of Annual General Meetings alone,” he said.

Prof Mak noted that hybrid meetings would be the best from a shareholder point of view.

“Hybrid where even shareholders who attend virtually have opportunities for live Q&A and live voting. I think that will be the ideal model,” he said.

While virtual meetings may be more convenient for shareholders to attend, there are still advantages from having physical meetings.

“One advantage of physical meetings that is very difficult, almost impossible, to replicate through a virtual meeting is the interactions before and after the meetings with the board and management,” he said.

Requiring all companies to have hybrid meetings may be too prescriptive, though.

Regulators would likely set a minimum baseline, where companies have a physical meeting with all the shareholder rights. Or if companies want to have a virtual meeting, they have to replicate the shareholder rights that apply in a physical meeting: opportunity for live Q&A and live voting, he added.

While SGX RegCo could provide guidance for listed companies, Prof Mak suggested other entities might play a role too.

“I also think MAS and Acra should be mindful that shareholders rights and proper shareholder meetings are also important for non-listed companies,” he said.

He said a Companies Act Working Group report in 2019 was supportive of companies having digital meetings, with flexibility about technology being used.

“My view is that the working group was a bit too pro-business and not shareholder friendly enough,” he said.

“I’m hoping now that MAS and Acra will probably have to go further and think about what kind of amendments should be put in place if they are going to permanently allow virtual meetings.”