Voting at physical company meetings

This insight considers the voting process at a physical company general meeting and how to ensure that votes are counted and recorded accurately.

Advances in technology since the start of the 21st century have made it increasingly possible for companies to supplement or replace conventional in-person meetings with electronic forms of participation. The COVID-19 pandemic accelerated the adoption of those alternatives, with many companies holding virtual meetings (conducted wholly online) or hybrid meetings (allowing shareholders to attend and participate either at a physical venue or through an electronic platform). 

The market has since moved back towards traditional meetings, with most listed companies now holding physical-only AGMs. Although some companies continue to hold a physical meeting with a live webcast, broadcast or dial-in facility, this should not be confused with a hybrid meeting. Unless remote participants can attend, speak and vote electronically, they are observers rather than attendees for legal purposes. 

Given that physical-only meetings remain the predominant format, this insight focuses on voting at this type of meeting. With potentially large numbers of shareholders attending and voting, how can companies ensure that votes are counted accurately?

Eligibility to vote

At a general meeting, resolutions are put to the shareholders and voted on by those entitled to do so. 

A company’s articles of association will specify who is eligible to vote at a general meeting, and that will include shareholders on the register of members at the voting record date. In addition, the articles will usually authorise any shareholder entitled to attend and vote at the meeting to appoint another person to exercise their rights instead of them. That person is called a proxy. A single shareholder can appoint more than one proxy, as long as each proxy is appointed to exercise voting rights over different shares held by that single shareholder.

The chair is often appointed as proxy for many members and may receive a mixture of directed, discretionary and abstention voting instructions.

A corporate shareholder will also be entitled to appoint one or more individuals to act on its behalf, either as a proxy or as a corporate representative. 

Voting on a show of hands

The usual starting point for many companies, subject to their articles of association, is a vote on a show of hands. Each member present in person has one vote and each duly appointed proxy present also has one vote. However, if several shareholders have appointed the same person as a proxy but to vote in different ways, the proxy will have one vote for and one vote against the resolution. 

Before the meeting, the company secretary and registrar should establish the proxy appointments and voting instructions received, including any discretionary votes, and prepare an accurate breakdown for the chair. They should also ensure that no votes are counted twice where a member attends after appointing a proxy. Although a proxy has a statutory obligation to vote in accordance with instructions given to them, the company is not under a duty to check that this has happened. 

Unless the result on a show of hands is obvious, the votes should be counted by the chair with assistance from any scrutineers appointed for the meeting (see below). Even where the result appears clear, the chair should consider demanding a poll if the proxy votes indicate that the result on a poll may differ or if a poll is needed to reflect the voting rights attached to the shares.

If a decision is reached on a show of hands, the chair should declare the result in accordance with the company’s articles. A poll may, nevertheless, be demanded immediately after the result is declared. 

If a show of hands is inconclusive, the chair should normally demand a poll so that the voting rights attached to the shares can be counted.

Demanding and voting on a poll

Typically, a company’s articles of association will set out when a poll may be demanded and by whom. 

Articles will commonly allow the chair, shareholders or their proxies, corporate representatives, and the directors to demand a poll. The maximum number of shareholders that the articles may require to demand a poll is five. 

If a poll is validly demanded and the chair improperly refuses to hold one, any purported result on a show of hands may be invalid. If the chair believes a poll is unnecessary (because, for example, they hold overwhelming proxy votes that align with the show of hands) the chair should explain this to the meeting and ask the demanding shareholders if they still wish to proceed.

A company’s articles will usually allow a poll to be demanded either before a show of hands, or immediately after the result is declared on a show of hands. The chair may also demand a poll before the resolution is put to the meeting.

The poll procedure should be agreed before the meeting. Votes may be collected using paper voting cards or electronic handsets or devices. Electronic voting can speed up counting and provide a clear audit trail, but the company should test the system, establish contingency arrangements, and explain how technical failures will be handled. 

Shareholders need to be made aware of the results of any poll as soon as possible. Depending on the number of votes cast, the result may be declared at the meeting. If, however, counting will take longer, the chair should inform shareholders when and where the results will be announced. Quoted companies must make a regulatory announcement to the market and publish poll results on the company’s website. 

Appointing scrutineers

There is no general requirement to appoint scrutineers, but doing so can improve confidence in the accuracy and integrity of the voting process, particularly at a contested meeting. A company’s registrars will commonly perform this role.

The scrutineers should agree the process for validating proxy appointments, reconciling votes with the register of members, counting votes, and reporting the result to the chair. Their responsibilities and any escalation procedure should be settled before the meeting.

Conclusive evidence

Once the result on a show of hands is clear, the chair should declare it and ensure that the declaration is recorded in the minutes of the meeting. Subject to the company’s articles, the declaration and the corresponding entry in the minutes are conclusive evidence of the result without proof of the number or proportion of votes recorded for or against the resolution. 

In relation to a poll, the detailed count should be retained with the meeting records and published as required by the Companies Act 2006 or the applicable listing rules. A resolution passed on a poll takes effect on the date on which the result of the poll is determined and not when the results of the poll are announced.