Edelman Smithfield and Taylor Wessing have surveyed the largest listed companies in Germany by market capitalization on how they conducted their annual general meetings (AGMs) in 2023, how they made use of the new framework for virtual AGMs and what their experiences were.

The information provided by the 110 participants in the survey provides insights into how the new virtual AGM regulations are being implemented in practice and the trends that are developing. The companies surveyed provided information on how satisfied they are with the format chosen in each case and how they assess the new legal situation.

The participation rate was highest in the DAX40 and MDAX, at around 60% in each case; in the SDAX it was just over 30%. The share of virtual AGMs and physical AGMs is roughly the same across the entire group of companies surveyed (with a slight preponderance of the virtual format) - but among participants in the DAX40, the proportion of virtual AGMs is 71%. For companies with larger market capitalization, the virtual AGM was used more frequently. For companies with lower market capitalization, a return to the face-to-face format was often more attractive. Individual companies may have initially waited to see how the new format would perform this season. 

Satisfaction with the chosen format is very high overall (9 on a scale of 1 to 10) and very slightly higher for the virtual format. There were no significant negative experiences or the impression of the virtual format in particular was not dampened in the long term. The participating companies that have held a virtual AGM clearly rate the new format more positively than the AGM in presence and predominantly also as superior to the format prescribed by the COVID-19 emergency legislation. The new virtual AGM has thus passed the practical test.

The majority (60%) are likely to stick to the format chosen in 2023 in the coming years. Another 30% were still undecided at the end of the survey in September 2023. Among the companies surveyed that held their 2023 AGM in attendance, 9% say they are considering changing format, compared with just 2% of those with a virtual format. The proportion of companies using the virtual format could increase in the future, particularly if there is a further increase in openness to the new format among companies, shareholders and other capital market participants and the associated costs fall.

According to the respondents, the main reasons for holding a virtual AGM were the management's fundamental attitude to the virtual format and sustainability and cost considerations.

By contrast, the main reasons for holding an AGM in person were, in addition to the fundamental attitude of the management, the expectations of investors, fund management companies, protection associations and proxy advisors, as well as the aspect of process and legal certainty.

There is no general recommendation for the best AGM format. Instead, companies should listen to their stakeholders and their expectations. It is precisely the nature of the shareholder base that is crucial for the right decision. And it is important that the decision for a format does not appear interest-driven and is well explained.  That is especially important if a company decides to change its format from the previous year.

The AGMs in 2023 have shown that both virtual and physical events can be well-staged, entertaining, convincing and technically secure. And a substantive dialog with shareholders can also take place virtually. If companies choose a virtual event, they must take the time to invest in the technical platform, video content and interactive elements. 

In the end, it all comes down to the right preparation and practice, and the general attitude toward communicating with shareholders in a convincing way. A well-staged AGM will build trust with shareholders and other key stakeholders and thus is a key element in an overall communications strategy.

Robert Labas, Executive Director, Strategic Situations & Investor Relations, Germany