2021 the era of the online AGM finally come to Japan

Please allow my strange English... because it has produced with Google translation. (Please do not laugh ;) my Japanese is also strange... ) The original article is?here.

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Although it is in the middle of the intensive season of AGMs (the original article was written on 27th June), I notice a big change in this year's AGMs. I want to share some impressions of those that I participated in and my expectations for the future.

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The era of the online AGM finally come!

Although discussions were held last year, there were not many cases where online AGMs were held, but this year, 13 of the 16 companies (in my portfolio) that hold AGMs at the end of June have made some online provision. I had not thought about attending until then, but when it comes to online AGMs, it made me decide, "OK, let's see it in real-time", and I realise that many companies have AGMs at the same time. I logged in to different shareholders' meetings and used mobile terminals and PCs placed around the room as I was working from home.

There are several types of Online AGM. One of them is solely viewing only, the other is that attendees can send questions in advance, and finally those that allow full-scale "online attendance" that allows you to exercise your voting rights.

I learned a lot from being happy when my question was taken up, being impressed (or angry) by the questions of other shareholders and the attitude of the management representatives who answered them.

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AGM Online attendance (as same as in-person)

I call" online attendance" here, where a system allows attendees to be recognised as attendees, ask ‘shareholder questions’ via the internet, and exercise their voting rights. I attended until June 26th, Z Holding, Softbank, LIXIL in this style.

Proposal No. 1 of Z Holding is a change of the articles of incorporation so that a full online AGM can be held from next year. CEO described the achievements that had made it possible to attend online until this year. Moreover, he politely explained, "Just because the articles of incorporation have been changed, it does not mean that we have decided to go online only." Regarding the report about the business result, a video made in advance will be screened, and questions were accepted from the shareholders at the venue first.

Questions from online attendees, which has relatively low hurdles to ask, seemed to summarise similar questions, but my question was also responded to.

Questions from online attendees, which has relatively low hurdles to ask, seemed to summarise similar questions, but my question was also adopted.

At SoftBank, shareholders have issued two motions to amend the dividend. That function was also displayed on the screen. I didn't have a chance to vote here because the company proposal was in favour of many, but I was expecting what the input screen would look like. Will there be more opportunities to vote for the amendment motion on the day of the full online general meeting?

This time, my question was taken up by both Softbank and LIXIL.?I was able to understand better the situation of each management and the way of thinking of the management.

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Satisfied even though it was AGM ‘viewing’ only

At first, I thought, ‘If you just watch it, no difference to watch the recording later’ but I realised that it is not true. Watching in real-time has a great impact on understanding what other shareholders think and how management responds.

Sumitomo Corporation received a shareholder proposal regarding TCFD disclosure. Since the AGM was held at the same time as Z Holding, I couldn't pay much attention to it in the first half, but the Sumitomo Corporation AGM took over two hours compared to that of Z Holding which ended after about one hour. Shareholder questions were mostly about performance, not shareholder proposals on climate change. At the AGM, most of the questions come from individual investors, who questioned management on issues such as "what is the reappointment of all directors while incurring such extraordinary losses?" as same as questions from institutional investors. The state of the management responding to this really shows the way of thinking and the situation of them. There were also questions asking the candidate's attitude, "I cannot see one of the new director candidates. Why is she absent from the AGM?

At Japan Post Bank, I was impressed by the polite answer to the question of a shareholder who seemed to be unfamiliar with the Companies Act. On the other hand, another shareholder holds a questionnaire (probably) sent from Japan Post Bank and said "This is very personal information, but you asked us to answer by such a simple questionnaire. I want to know your policy of compliance and awareness of the management". It was quite intriguing that the officer in charge of Compliance is somehow answering the question from the shareholder.

Traditionally, at Hitachi's AGM, some shareholders ask questions that look like questions in collective bargaining of a Labor Union. This hasn’t changed even as the AGM has gone online. One shareholder spoke about his sadness when he saw the Mitsubishi mark lined up in the factory of the business sold to Mitsubishi. Another shareholder spoke about Hitachi Metals, which was announced to be sold just before, with a history dating back to World War II. He said that it has contributed to Japan for a long. In response, the management emphasised, "That's right, Hitachi Metals will develop globally from now on, and we still have that spirit."?

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New function, applause button

I attended several online shareholders' meetings last year, but the "applause function" has appeared as a new tool that I did not see last year. In LIXIL, there is an explanation, "Please press in the scene you are interested in" and if you click it, you can see how much other people are clapping at this timing in the graph. There was also a scene where another company seems counting people who were clicking "applause". Indeed, when it is necessary to consider "applause as the majority", it is convincing to show whether this function is really large even if it is not an exact number.

In addition, on the day of viewing, there are some that distribute only the URL and password, and some have a function to log in using the shareholder ID (creating an environment where only shareholders can participate and asking for "shareholder questions" to be sent in advance. In the latter, it would be possible to collect statistics on who was present. In some cases, when I logged out, I was asked to answer a questionnaire. This data will be useful for dialogue with shareholders in the future.

At the Mitsubishi Chemical AGM held on the 25th, one of the shareholders at the venue asked his question in English. Shareholders, who are probably retired from the company, said he was deeply moved by the fact that Mitsubishi Chemical has grown into a global company and welcomed the CEO from a foreign country. And he said that since there is a movie called "Lost in Translation", he would like to ask in English.

In addition, a shareholder who had epilepsy said that he wants Mitsubishi Chemical to enter the development of the drug, and the director in charge replied, "I will make a proposal at the first board meeting after this AGM." The new CEO enthusiastically answered a variety of questions, but after all the agenda items were completed, he slowly thanked the shareholders in Japanese.

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The online shareholders' meeting may change the relationship between companies and shareholders. This may have been boosted by COVID-19 pandemic, but I am convinced that it is one of the very positive changes that will change Japanese companies.