Electronic communication: Virtual meetings

NOTE: this article has been updated as at November 2015

It is no longer a legal requirement to hold an Annual General Meeting (AGM) but many companies still do. An increasing number meet via the effective use of virtual media.

Virtual meetings

The EU obviously believes that the virtual medium is the future for business communication as hidden among the 1,300-odd sections of the Companies Act 2006 is s360A, which says so. This section was an ‘addition’ to the main CA sections, being required by EU Directive 2207/36/EC and allows companies to conduct meetings in a way that enables electronic participation by persons not present in the meeting room (termed ‘together at the same place’). Closed circuit television linking individual locations with one central location can be used but the courts have decided that audio or email link only does not constitute a ‘meeting’ as attendees need to be able to see and hear each other (Byng v London Life Association (1989) 1 All ER 560).

Those who have ever attended a virtual event will appreciate the benefit of not having to spend time and money travelling to the venue (this will become even more of a consideration following the imminent rail fare increases). Although the savings might not be massive for a small private limited company it can add up to a tidy sum when you look at the bigger companies with director/shareholders having to attend from different parts of the UK or even the world.

But a virtual meeting cannot be a substitute for every kind of meeting and you cannot just turn up and talk - planning is needed albeit planning for a different format than for a meeting in person. There are pros and cons, with the ‘pro’ arguments mainly based on operational benefits and the ‘cons’ on the lack of personal interaction:

Pros

• Communication - allows wider communication and stronger participation. A webinar can present a professional presentation to a global audience at a time to suit

•  Practicalities - as previously said, getting everyone to come together physically in the same place at the same time can be difficult logistically and possibly costly (travel expenses, rent of room, subsistence costs, additional time off work etc.); whereas a few clicks of a mouse can achieve the same effect of bringing people together

• Interaction - invariably even at a physical meeting it is difficult for everyone to be heard as there just won’t be the time for everyone to have their say. However, in a virtual meeting multiple functions can be run so that you can indicate your need to make a comment and it will be noticed 

• Choice of participants - it can be arranged for an expert to attend if only for a few minutes such that persons who otherwise would not be available can have easy access to the meeting, anytime, anywhere.

Cons

• Personal contact - the ‘remote’ aspect of virtual meetings is not liked by some; not being able to read body language, although companies are integrating video and audio conferencing with screen sharing to allow meeting participants to see as well as hear each other

• Participation - as the listeners cannot be seen it is impossible for the presenter to judge whether a point has been understood or needs to be reiterated or even whether the presentation is being too slow or too fast. The participants may feel isolated and not ‘part of a group’

• Value for money - only if viewed as successful

• Restrictions - In virtual meetings where each participant wishes to contribute, usually a maximum of say, 12 people is appropriate. Despite there being an indication on the screen of who is speaking it can be difficult to be heard. Higher numbers might indicate their need to speak but then have to wait - you can’t ‘butt in’ without asking permission

AGM’s via the virtual medium

Webcasts are already being used by many PLC’s for their AGM’s and improvements in method and affordability mean that smaller companies will look to take advantage of this technology.

Agenda items at conventional AGMs are usually the same year in year out and in any event the results of resolutions are invariably predetermined as most shareholders vote by proxy such that their votes are cast and counted before the meeting is held.

Many US companies have opted for a ‘hybrid’ meeting for their AGM - meaning a physical meeting for those who wish to attend in person in conjunction with an online presence. This is because they have found that virtual meetings bring their own problems and many shareholders still want to meet with directors face-to-face if only once a year.

Royal Dutch Shell is an example of a company that has embrased the use of virtual technology. For their 2015 AGM a webcast was used for those shareholders who did not wish or who were unable to attend the 'real' AGM.Those watching in the UK were able to participate, vote and ask questions in real time without the cost of a trip to the Hague.

Further reading:

• AGMs: Get the details right
• Company meetings: Get the legal details right
• Secrets of online presenting revealed

About the author
Jennifer Adams FCIS TEP ATT (Fellow) is Associate Editor at AccountingWEB. A professional business author specialising in corporate governance and taxation, she has written for many of the leading specialist providers of legal, tax and regulatory publications. Jennifer runs her own accounting and consultancy business with offices based in Surrey and Dorset.