Virtual stockholders’ meetings

Starting this month and the next three months, most listed companies in the Philippines would hold their annual stockholders’ meetings (ASMs).

It is a yearly ritual that companies, as required by law and their articles of incorporation, observe principally for two reasons: first, to give the stockholders the opportunity to hear from management the results of business operations in the preceding year; and second, to elect the members of the board of directors.

Before the COVID-19 pandemic, the Philippines’ top corporations held their ASMs in fivestar hotels with smartly-dressed attendants, sumptuous refreshment tables and printed materials that glowingly showed their accomplishments.

Members of the media were invited to the meetings and “encouraged” to interview the company’s bigwigs with the expectation that they will write or post positive reports about the company, and which they often do.

For some retirees who own shares in those corporations, ASMs were welcome breaks from the monotony of their daily routine and were occasions to have “selfies” with prominent business executives.

The financial reports during the ASMs were closely reviewed by investors and stockbrokers for any information they think would be material to their deciding whether to buy or sell the companies’ stocks.

Except for companies that failed to live up to their stockholders’ expectations, ASMs usually ended in an atmosphere of good feeling, with the attendees (especially those who received freebies) looking forward to the next ASM.

No thanks to COVID-19, the good old days of ASMs ended last year when in mid-March the government ordered a lockdown in Metro Manila and other parts of the country to arrest the spread of the virus.

Virtual (or digital teleconferencing) ASMs became the preferred mode for the conduct of that corporate ritual.

That norm was warmly welcomed by business executives who were in their senior years and had medical issues because they did not have to leave the comfort of their homes to be physically present in the ASMs.

Depending on the anticipated number of participants and the quality of internet facilities available in certain areas, the ASMs were done either through Google Meet or Zoom.

This year, with COVID-19 still a menace and, worse, deadly variants have arisen, it will be virtual ASMs again.

The delay in the procurement of vaccines from sources other than China does not give confidence the virus infection would be significantly reduced by the middle of the year.

Truth to tell, the change in the format of ASMs in light of

COVID-19 is a blessing in disguise to companies with wide stockholder bases and are used to holding their ASMs in grand fashion.

Their savings in terms of time, money and effort are tremendous.

With virtual ASMs, there is no need to allocate funds for sending the notice of the meeting to the stockholders, printing as many copies of the annual report and audited financial statements as the number of expected attendees, reserving conference rooms in hotels and buying foods and drinks.

The notice of the meeting, annual report and other documents that would be discussed at the ASM can be sent digitally or electronically to stockholders who express interest in reading their digital version.

At best, the efforts in preparing for the ASM would revolve around the company’s IT experts who have to make sure the facilities from which the company officials who would deliver reports are in good condition and would be received clearly by their intended audience.

Outside of ensuring the integrity of communications with the stockholders, the trickiest aspect of a virtual ASM is determining the presence of a quorum.

The corporate secretary has to make sure that, based on the proxies he or she has received and a roll call of stockholders attending through teleconference, the number of stocks needed to be present to constitute a quorum under the bylaws is represented in the ASM.

The rest of the proceedings is a walk in the park.