VIRTUAL SHAREHOLDER MEETING: A FEASIBLE FUTURE?

[SAGNIK ADITYA is a 3rd year BA LLB(Hons) student at St. Xavier’s University,

Kolkata]
The principal advantage of having a corporate form of structure is that it allows the
shareholders an opportunity to let their money be managed by professionals. To a
layman, the shareholders are the owner of the company, however, remarkably, they
delegate their duty to look after their investment to a board of directors. Therefore, it
allows professional management of the said investment and further, it allows the
investors to invest in different companies. It is impossible for an investor whose daily
activity or expertise does not match with the company to manage the company if not
running it. The shareholder meeting here plays an important role and operates as a
succour for the investors and thereby espoused in section 96 of the Companies Act,
2013 and mandated to be held every financial year. The shareholders enjoy voting
right in meeting organised by the incorporation for the shareholder. The same is
exercised by the shareholders through proxy or by present in physical form.
Shareholder meetings are called to discuss some decision on something which might
impact the stake of the shareholders and their consent obliged the company to act
accordingly.
The usual format of conducting this meeting has hitherto been in physical form.
However, as technology advances, the format of the meeting has changed or become
hybrid. Now a large number of companies use VSM1 to conduct their Annual General
Meeting. Lately, the deadly coronavirus forced the government to pass the
notification allowing shareholder meetings to be conducted on a virtual platform. It is
no doubt that this contagion covid 19 infection has made a drastic change in the
corporate behaviour thereby locking us in four walls. Just like other sectors, the
governance of the company had been changed and conducted through the online
platforms available.

TYPES OF ANNUAL GENERAL MEETING:-

Physical mode:- It is a conventional method of holding the Annual General Meeting
whereby the company calls all the shareholders to a certain location.
Online Mode:- It is done completely through an online medium( audio and video
mode)
1
Virtual Shareholder Meeting
The virtual mode certainly reduces the cost of holding the meeting furthermore, it
allows the shareholders to attend the meeting seating in the comfort of their homes.
However, it may be worrisome if not cumbersome to the shareholders.
THE CONUNDRUM OF HOLDING THE MEETING ONLINE FROM THE SHOE OF

SHAREHOLDERS:-

Of late, the SEBI chief Ajay Tyagi expresses his distrust of holding this on a virtual
platform. Certain groups of shareholders also raise their vehement objections against
it.
Their point of contention is that this virtual mode of conducting an AGM overlooked
the shareholders' perspective thereby, giving them a feeling that there are being
marginalised. The long-held concerns for the shareholder are particularly:-.

 There is a huge problem in asking a follow-up question. Generally, the

investors are not allowed to supplement questions.

 There is a chance, since there is no transparency, that the company might

rephrase a similar query as well as answer.

 There is another problem with holding a general meeting online that is there is
no eye contact with the directors or the stakeholders. We might not understand
this as our money is not at stake.

 There is a huge probability that a company might generate certain prepared

questions in their favour and answer accordingly during the QnA session, in
place of the original shareholder to fill up the time slot for the QnA session.

 In this form of a shareholder meeting, it is possible that the voices of the

shareholder might not be heard.

 Last but not the least, I found the most important issue is the connectivity
issues.

Conclusion:-

From the point of view of shareholders, virtual shareholder meeting has always been
vehemently gainsaid by the shareholders to some extent due to the reasons cited
hereinabove. Nonetheless, some shareholders are also there who are protagonists in
the virtual shareholder meeting citing reasons such as that they have been looked after
professionally and given due respect furthermore, it was also stated in a report by
Harvard University on Practices for Virtual Shareholder Meetings that some company
even gave them the option to the stakeholder as to how they would like to present
their comment or themselves. Again from the perspective of the company, it is indeed
a lucrative option as it reduces the cost of holding the meeting in person by
eliminating the catering, management, security and the rent cost of the property
wherein it may be conducted. It might seem beneficial to the company and perhaps to
the shareholders however, the technical glitches are real, the chance of being
overlooked is there and the coordination, rehearsal and subscription fees of the video-
communication service to hold virtual shareholder meetings might substitute the costs
such as mentioned hereinabove and most importantly the in-person experience if not a
sense of accountability cannot and will be not be simulated by holding it over virtual
platforms.