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It’s AGM season – and here’s what you need to know

The Annual General Meeting (AGM) season has started in earnest, and KRIS has been involved in some proxy hunting assistance, as well as gathering feedback from shareholders. In this article, we share our list of observations in the hope that it will help guide others in preparing a Notice of AGM or for the AGM itself.

Our first observation is that the “last-minute.com” delivery from the nominee companies to the transfer secretaries remains firmly in place, leaving very little time to engage with shareholders if a resolution might not be passed. Despite this, if you maintain a good relationship with institutional shareholders, they will go out of their way to help, liaising with their internal portfolio managers and then the nominees to resubmit voting forms.

Here are more:

  1. Some shareholders politely drop an email indicating the resolutions they have voted against and provide their reasons, which is very helpful.
  2. A governance roadshow ahead of the AGM is useful to pick up any issues and make changes to the resolutions, if needed. 
  3. We observed that one large institution supports director rotation after the recommended nine-year tenure to ensure director independence.
  4. A reminder that the market favours a well-constituted Audit Committee composed solely of independent non-executive directors.
  5. There is a common belief that the Chairperson of the Board should not serve on the Audit Committee.
  6. Unsurprisingly, the remuneration report features prominently, reminding us of the explanations, their weighting, and the levels required to achieve them, especially when dealing with all the acronyms in this report, such as KPIs, FSPs, LTIs, STIs, etc. Some institutional shareholders dislike ad hoc fees to directors, feeling these could compromise a director’s independence.
  7. We have a suspicion that proxy advisory firms recommended voting against one special resolution, i.e., “Financial assistance for the subscription and/or purchase of shares”, despite an explanation being provided. When we queried the vote, we were told that the resolution was vague. After engaging with shareholders, an email was circulated explaining the specific reason for the special resolution, leading the shareholders to change their votes.
  8. In some instances, and the above is evidence thereof, institutions will simply take their lead from proxy advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis. This can be problematic for South African companies as both are primarily based in the US and Europe, and their recommendations may not fully consider the local context, including:
  • South Africa’s corporate governance codes, such as King IV™.
  • Local economic, social, and political dynamics, including transformation imperatives like Black Economic Empowerment (BEE).
  • Regulatory frameworks specific to South Africa.

This can lead to recommendations that are misaligned with local best practices or stakeholder expectations.