Best Practices for Virtual Shareholder Meetings

Before the COVID-19 pandemic changed everything, in-person shareholder meetings were standard. But mandated building closures and limits on the number of people allowed in a room became the norm for an extended time in 2020, creating obstacles and requiring companies to consider alternatives.

Fast forward five years, and the benefits of online shareholder meetings are now clear. Shareholders like being able to participate remotely, eliminating the cost and hassle of traveling to a designated meeting location, and companies save by not having to rent large venues to host elaborate events.

While this framework provides flexibility, it comes with strict U.S. Securities and Exchange Commission guidelines that companies must follow. Below, we’ll outline some best practices to help you stage virtual shareholder meetings that are as effective and accessible as possible while meeting compliance requirements.

Understanding the Legal and Regulatory Framework

Most U.S. states permit corporations to conduct annual shareholder meetings in virtual-only or hybrid formats, though specific legal requirements vary by jurisdiction. Many states temporarily relaxed restrictions during the pandemic to accommodate virtual meetings, and while some of those emergency provisions have expired, numerous states have since enacted or maintained legislation allowing virtual or hybrid shareholder meetings, provided certain conditions are met. However, companies must still ensure compliance with state laws and their own corporate bylaws when planning such meetings.​

For instance, Delaware law permits virtual-only shareholder meetings if authorized by the company’s charter or bylaws. In contrast, New York requires that a physical location be available for shareholders to attend, thereby allowing hybrid but not exclusively virtual meetings.

It’s essential for corporations to consult legal counsel to navigate the varying state laws and ensure that their meeting formats comply with all applicable regulations.

The SEC also made certain exceptions for companies changing from an in-person to virtual meeting in the early months of the pandemic, but corporations now must follow all regulations for virtual shareholder meetings. These include:

• Notifying shareholders in advance of their options for attending in-person or remotely
• Making proxy materials available at least 40 calendar days prior to the meeting
• Providing opportunities for shareholders to present their own proposals, and publishing guidelines for shareholders who wish to do so virtually
• Verifying the identity of shareholders who want to participate remotely
• Identifying and explaining how shareholders can participate in the virtual meeting, such as voting on a proposal or asking questions
• Since much of the information presented in a shareholder meeting is highly sensitive, businesses must provide a secure, compliant platform via which to share data, collect responses, and record feedback

Choosing the Right Technology

Technology provides opportunities for companies to expand the types of information they can provide to shareholders during an annual meeting, but it also can create complications that need resolving prior to the meeting. An ideal arrangement for a virtual shareholder meeting includes several virtual data room features, such as:

• Broad accessibility to the average shareholder
• Secure data repositories
• Real-time voting
• Seamless Q&A management
• Secure login
• Streamlined document-sharing options
• Seamless integration with corporate governance software and proxy materials

Selecting the right virtual meeting technology can make the difference between an effective meeting and a disaster. Shareholders expect companies to keep their sensitive information secure, including by using robust data encryption and two-factor authentication. Depending on the number of shareholders, businesses also may need to confirm that the system can handle the number of attendees without service interruptions. Delays in connection or the dissemination of information also can create confusion or frustration that would not be issues for in-person meetings.

Preparing Shareholders for a Virtual Format

As one component of a good investor relations strategy, businesses should aim to provide information about the virtual format in the most accessible ways. Regulations require companies to provide adequate notice prior to a shareholder meeting, whether it is in-person or virtual, but how that information is disseminated can make a difference in terms of participation. Corporations may want to poll shareholders about their preferred methods of notification, such as text, email, paper mail, or website notices. A combination of approaches can increase reach.

For the virtual meeting, simplifying the effort of connecting and participating makes it easier for shareholders to get what they need. Companies should consider doing the following:

• Providing clear instructions or tutorials demonstrating how to connect, vote, or ask questions
• Testing the system in advance of the meeting to identify possible technical issues
• Offering a real-time help desk or support person to help attendees with problems during the meeting

These steps can show shareholders that their engagement is an important part of the experience.

Shareholders Remotely

Improving shareholder engagement can be a bigger challenge for virtual shareholder meetings. Although companies may prefer virtual shareholder meetings for their efficiency, shareholders do not always feel the same. In a meeting with hundreds of attendees, a single shareholder presents only as an online entrant may feel like their opinion is not heard. Another potential issue is that long meetings with lots of speakers or tedious information can result in attendees losing interest.

As a remedy, businesses should consider these practices for improving remote communication and engagement:

• Design interactive elements such as Q&A chats, real-time polling, or breakout discussions.
• Create a lineup of speakers with relevant information and visual aids.
• Provide plenty of time for shareholder questions, so that the meeting does not last far beyond the anticipated end time.
• Put a neutral facilitator in the role as moderator, to ensure smooth speaker transitions and fair question selection.

Ensuring Secure Voting and Accurate Records

Secure voting and accurate record-keeping are paramount for an annual meeting, and virtual formats often make this effort more effective. Available proxy statement solutions include giving companies the ability to provide a unique code in proxy materials that shareholders can use to verify their identity when logging in for the meeting. For smaller meetings, businesses may choose to verify identity through video feed as well.

Best practices also include using a platform that facilitates the following:

• Digital Voting: Use tools that simplify the voting process for shareholders and allow for real-time tracking of votes.
• Record-keeping: This empowers the ability to build archives of records regarding attendance, votes, questions, and answers.
• Audit Trails: Maintaining a chronological record of activities during and after the virtual shareholder meeting lets a company verify accuracy later.

These steps help instill confidence in the online voting system and the business’s records.

Addressing Technical Glitches and Contingencies

Online systems occasionally fail, and companies should prepare their organization and shareholders for the possibility. In addition to regularly testing system operations prior to the annual meeting, businesses must have a plan to help shareholders reconnect or find other means of participating if something goes awry. Technical considerations should include:

• Backup Plans: Have multiple ranked options for streaming or calling in by phone, so that shareholders can resume participation in the meeting.
• Clear Support Channels: Provide easy-to-find information about tech support via phone, email, or chat.
• Postponements & Adjournments: Develop procedural steps that the company will follow if the virtual shareholder meeting cannot continue due to technical problems.

Companies should develop plans to handle these considerations and publish guidelines and assistance in advance of the event, so that shareholders can find the information they need as quickly as possible.

Post-Meeting Follow-Up and Reporting

Post-meeting reporting is a key component of compliance with SEC guidelines. Companies should keep a record of which shareholders attended the meeting, any issues that required a vote, and how each shareholder voted. Although much of this information is provided directly to the SEC, businesses should make some content of the reports available to shareholders and the public, where required:

• Results Announcement: Provide results of voting and any key decisions made during the annual meeting.
• Transcript or Recording: Publish a transcript or recording of the meeting so that shareholders can browse, especially if they are unable to attend.
• Post-Meeting Analytics: Note shareholder participation in the meeting and provide transcripts of Q&A sessions.

A post-meeting evaluation of this information, including shareholder feedback, can help companies determine how well the meeting went. It can also identify problems to resolve for the future.

DFIN’s Role in Virtual Shareholder Meetings

The use of proven, trusted software can eliminate the stress of managing online shareholder meetings, preparing reports, and handling online engagement. As a virtual data room provider, DFIN specializes in the creation and management of secure, compliant reporting. Our proxy statement solutions allow companies to create visually engaging, informative, useful data for shareholders to consider. We offer a comprehensive selection of integrated tools that businesses can use to streamline their meetings, including real-time voting, Q&A, and reporting. We focus on providing a reliable, user-friendly platform that meets compliance requirements and integrates seamlessly with proxy management.

To learn more about your options for your next virtual shareholder meeting, book a demo today.