Virtual-only meetings erode shareholder democracy, group warns

Worried man lookind at laptop in a café — iStock / Ljubaphoto

An initiative led by the B.C. General Employees’ Union that includes pension funds, asset managers and socially responsible investors is raising concerns about the use of virtual-only shareholder meetings and an erosion of shareholder democracy.

In an open letter, the group says that in theory virtual-only meetings could increase shareholder participation, but there is evidence since the pandemic began that they have instead muted shareholder voices.

The 38 signatories to the letter include the California State Teachers’ Retirement System, Desjardins Global Asset Management, the Church of England Pensions Board and Connor, Clark and Lunn Investment Management.

Together, the group represents more than $1.7 trillion in assets under management and advisory.

It is asking S&P/TSX 60 companies to publicly disclose how they will ensure shareholders’ statutory and common law rights are being upheld.

The group says 57% of S&P/TSX companies held virtual-only meetings in 2023 compared with zero in 2019.

“The essence of shareholder democracy lies in the robust exchange of perspectives and the accountable exercise of shareholder rights. Some issuers are using virtual meetings to push practices that erode these fundamental principles,” said Paul Finch, treasurer and CFO of the BCGEU, in a statement.

“As stewards of significant assets, it is our collective duty to ensure that technology serves as an enhancer, not a barrier, to shareholder democracy.”

In February, the Canadian Securities Administrators (CSA) issued revised guidance on the use of virtual shareholder meetings. That guidance advises companies to ensure shareholders receive clear disclosure on how to participate in virtual meetings — including on voting and questioning management.