The 2023 general meetings (AGM) season will begin on March 7 with Novartis. After three years behind closed doors, the traditional AGMs will resume their rights. However, the threat of virtual meetings already hangs over this new season. Novartis indeed proposes to its shareholders to include in its articles of association the possibility of organising 100% virtual AGMs. As already announced, Ethos calls on shareholders to oppose such propositions which will most likely occur many times during the year.
The revision of the Swiss Code of Obligations, which entered into force on 1 January 2023, authorises companies to hold annual general meetings (AGM) without a physical presence of the shareholders as long as it is provided for in the articles of association. It is therefore up to the shareholders to decide whether they accept this possibility.
In addition, and unlike AGMs during the COVID pandemic, companies wishing to hold a virtual AGM in the future will have to guarantee shareholders the possibility to vote and speak virtually during the AGM. No company based in Switzerland has tested such a system so far.
Yes to hybrid, no to 100% virtual
The Ethos Foundation, which has always encouraged shareholders to take part in the AGMs of companies they co-own, believes that the best way to increase participation is to organise "hybrid" AGMs, i.e. both a physical meeting and a live broadcast on the company's website with the possibility to vote and speak remotely. In this way, shareholders can continue to choose the best way for them to exercise their voting rights. Furthermore, the organisation of a hybrid AGM does not require any statutory change for the company.
A change in the articles of association which would authorise the holding of solely virtual AGMs therefore constitutes an deterioration of shareholder rights, which is why Ethos recommends opposing such a provision in the articles of association. For private shareholders or pension funds, the AGM often represents the only opportunity to meet and ask questions directly to the board of directors, but also to confront them with concerns specific to the company. It is therefore necessary to preserve this unique moment of dialogue.
Many shareholders attached to physical AGMs
Like Novartis, many companies listed in Switzerland will most likely submit such a request for a change of their statutes to their shareholders this year. As such, Ethos has adapted its voting guidelines and already announced in October 2022 to all companies that it will oppose any change in the articles of association which would allow the organisation of virtual AGMs only. Ethos could nevertheless accept a statutory provision which would limit the organisation of virtual AGMs in the event where a physical gathering of shareholders is prohibited by the competent authorities.
As the subject is controversial and many shareholders remain attached to physical AGMs, Novartis announced that if this amendment to its articles of association were to be approved, it would be resubmitted to shareholder vote at the 2025 AGM. The company originally planned to repeat this vote every 5 years only.
As for every season, Ethos publishes its voting positions for Swiss and foreign companies on its website 48 hours before the AGM is held.