| Socially Responsible Shareholdership in Canada |
The Annual General Meeting
The company's annual general meeting is one of the main events for active shareholders, especially those who have submitted resolutions to be voted on. In general, the majority of AGMs are held just after the end of the fiscal year in the late spring or early summer, as soon as the annual reports and financial statements have been prepared, with larger companies holding their meetings in major urban centres. Only a few hundred shareholders generally attend - it is common to see only a fraction of the shareholders actually show up in person, the majority having taken the opportunity to make their wishes known through the proxy voting process.
Preparations
Delegation development
There are a number of steps involved in preparing for the AGM, including deciding on who will comprise the attending delegation. The filer (and any co-filers) must present their resolution in person or via proxy at the meeting, or lose the right to file subsequent submissions for two years. It is good to have a designated substitute ready in case accident, illness or bad luck prevent attendance of the original delegates. Generally, there is strength in numbers, which will create a greater sense of support for the issues to be addressed, so any supportive shareholders who can make it to the meeting should try to do so. Public presentation is a skill that not everyone possesses, so this may be a factor to consider when choosing who will address those present.Briefing and reference materials
In presenting and speaking to the resolution, or any other matter to be brought to the attention of shareholders, the allotted time is short, so it is good to have notes or the full text of a speech done up beforehand to read from. Any useful evidence used to support arguments, such as reports, should be on hand for quick reference. It may even be helpful to plan to have human experts on hand, perhaps a researcher or a representative of an aggrieved party, in which case steps should be taken to have them attend as a shareholder designate. Be prepared to be interviewed afterwards by the media, and to discuss the issue with potentially sympathetic shareholders wishing to know more.Attending the AGM
Typical agendas
The agenda of a typical AGM consists mainly of a series of business items that it must conduct, as stipulated by law and corporate bylaws. The ordinary items of business include: presentation of the annual report, the financial statements and auditors report; election of members of the Board of Directors; and appointment of the auditor. Special business includes anything else, particularly presentation, discussion and vote on proposals and resolutions brought to the attention of the shareholders in the proxy circular, as well as any item of discussion raised by shareholders from the floor.Shareholder presentations, discussions and questions
All AGMs must allow for the presentation of resolutions, and the raising of questions and statements by the shareholders present. This is carried out by means of a pre-determined schedule in the case of resolutions, and on a first-come, first-serve basis for the questions.At some point, investors presenting a proposal will be asked to speak to their resolution. For a few minutes, you will have the microphone and everyone's attention. This is the final opportunity to persuade those present of the merits of the proposal – though most shareholders have already submitted their vote via proxy, major shareholders with significant voting clout are often in attendance. Your presentation will culminate in a motion to accept your proposal. Depending on company bylaws, a seconder may be required.
Questions may be asked from the floor by any shareholder entitled to vote at the AGM. Generally, each person will be allotted a few minutes in which to speak. The chair of the meeting has the discretion of cutting off discussion, or ending the meeting without allowing everyone to speak, though this is not common. It is here where shareholders may take the opportunity to bring up issues and make suggestions, even in the absence of speaking to a shareholder proposal.
Voting
Voting is usually done by a show of hands among those shareholders present at the AGM, usually a very small percentage of all the shareholders. This is usually done for the sake of expediency in circumstances when the Chair, whose hand counts for all the proxy votes assigned to him/her, knows that the dissenting votes will represent less than five percent of all votes cast. Should any shareholder request it, however, a full tally of all votes, including proxy votes, will be conducted. When the tally is complete the Chair announces the results at the meeting. All resolutions and their results are duly minuted, and no vote is final until the scrutineer tables a report.Afterwards
Rules for resubmission of proposals
As previously mentioned, proposals must pass a minimum threshold to be eligible for resubmission. Within a five year period, the first time the proposal is submitted, it must obtain 3% of the total shares voted, the second time requires 6% of the vote, and the third time 10%. If it fails to meet these criteria, the proposal cannot be submitted again for five years.Following-up with the company
It is very rare for any non-management resolution to receive more than half the votes. In fact, it is considered significant if more than 5% of the shareholder votes are favourable. In such cases, management, over time, will sometimes comply with at least part of the resolution requests. This is particularly true if the favourable vote increases in subsequent resubmissions.Regardless of the outcome of a single AGM, the shareholder should follow up with the company and ascertain if the percentage of pro-resolution votes was significant enough to soften management's stance on the issue. As time passes, and company leaders realize that the active shareholders are not going to go away, there is a possibility they may become more accommodating, especially if they also realize that other shareholders are becoming increasingly supportive of the change requested.
There is, unfortunately, no legal responsibility for a corporation's directors or managers to take action on a resolution, even if supported by a majority of shareholders. Though this case has never been tested in Canada, where shareholder resolutions are rare, there are a few instances in the US where the expressed wishes of the majority have been ignored, generally without consequence. The risk taken by the corporate directors (and therefore managers as well), however, is that of being replaced by an angry shareholder majority at the next AGM.
