For some, it is on the way to becoming a successful model, while for others, it remains a temporary solution: The format of virtual Annual General Meetings (AGMs) introduced during the pandemic is liked by most companies, while many investors prefer to engage with the executive and supervisory boards in person.

In the 2025 season, there will once again be a vote required, because many companies will need to renew their articles of association to authorise the online format. After the changes to the law permanently allowed virtual shareholder meetings, many companies proceeded cautiously due to some investor opposition. Instead of opting for a five-year authorisation they instead initially chose a two-year period. However, a number of companies supported by major shareholders who favoured the online format, and so felt safe in avoiding a potential disaster in the voting, did go for a five-year term.

According to a survey by law firm Taylor Wessing, a clear stance has emerged among companies. „The format has firmly established itself in 2024, after successfully passing the first practical test last year,“ says Nikolaus Plagemann, a specialist in stock corporation and capitals market law at Taylor Wessing.

From the lawyer’s perspective, the distribution between online and in-person formats suggests „that the virtual AGM is particularly attractive for large companies with a tendency for many AGM participants, offering cost advantages, while smaller companies with a manageable group of shareholders often fare better by renting the nearest town hall and setting up a buffet.“

According to the study, the number of shareholder meetings conducted in the virtual format in 2024 was comparable to the previous year. However, a shift between the formats was observed. According to the law firm’s survey, about 10% of participants changed their AGM format in 2024 compared to the previous year. This shift went in both directions: some companies switched from in-person AGMs to the virtual format, while others did the opposite. „The first group likely waited to see how the first movers handled the new virtual AGM format, which was first applicable in 2023, and what market standards would develop,“ says Plagemann.

The decision to switch from a virtual AGM to an in-person AGM is likely driven by specific agenda items, according to the lawyer. „When it comes to crucial resolutions, such as structural changes, the in-person format may seem preferable to allow for the expectedly intense discussions. We anticipate similarly motivated decisions in the future,“ says Plagemann. Even though many companies have found the format that suits them, they are likely to switch between online and in-person AGMs „depending on the case and as needed.“ „Even with the corresponding authorisation, the AGM format is not set in stone; it is decided anew every year,“ Plagemann adds.

With a view to the 2025 renewal of authorisations, Taylor Wessing recommends that its clients opt for five years, the maximum allowed by law, to reduce the formal effort and expense of frequent renewals.

„Of course, companies should gauge the expectations of stakeholders as early as possible, especially when narrow majorities are expected,“ advises Sebastian Beyer, also an expert in company law and capital markets law at Taylor Wessing.

On the investor side, Beyer continues to expect some resistance: „The shareholder protection associations will likely continue to confidently assert their positions, and criticise the purely virtual format," he says. „Sustainability, digitization, and cost efficiencies often conflict with the desire for personal dialogue and more active exchanges, so the topic is evolving. This is likely to continue next year alongside the regular renewal of authorisations.“

Plagemann advises investors not to take an „ideological“ stance on the matter. „The authorisation only grants a power. As our study shows, it doesn’t necessarily mean that it will be exploited.“

Regarding AGM content, Beyer notes that executive and supervisory board compensation is becoming more relevant, as many stakeholders are scrutinizing this issue more closely than they did a few years ago. Many companies are adjusting their executive compensation systems. The study also showed that the importance of non-financial compensation parameters is increasing, either through new inclusions or by strengthening their weighting. „This acts as a signal, and companies need to respond if they want strong shareholder support next year and to demonstrate sustainable corporate governance,“ says Beyer.

In Germany, the topic of Say on Climate is also being widely discussed. Most companies are actively working on their climate plans, but are not yet ready to put them to a shareholder vote. „There is no wave on the horizon: In the study, only about 10% of companies indicated that they are likely to consider a Say on Climate in the foreseeable future,“ Beyer notes.„The path of voluntarily submitting the climate plan to the AGM without a legal foundation still seems far off.“

The machinery and plant engineering company Gea was a pioneer in 2024 within the Dax family, introducing Say on Climate at its AGM and receiving a positive response. This could motivate other companies to follow suit. But Beyer tempers expectations, saying that „we don’t expect to see many cases in the next two years.“

According to the lawyers, issuers are also cautious about the new options introduced by the Future Financing Act. This includes the possibility of introducing an „E-Share“ and the expanded scope for capital increases. The legislature raised the volume for capital increases from authorized capital with simplified exclusion of subscription rights from 10% to up to 20% of the share capital.

„So far, only a handful of companies have adopted a resolution to create a digital „E-Share“ – the benefits are still not sufficiently tangible according to our study,“ explains Beyer. Companies also showed restraint regarding the reliefs for capital increases.

Commerzbank is one of the pioneers that obtained authorisation to issue electronic shares from its shareholders in 2024. However, no transition is planned yet; the bank stated in the AGM invitation that it wants to „future-proof“ the foundation for E-Shares. The agenda item received 99.97% approval.

The government intended the law to enhance the attractiveness of the German capital market, as equity financing in countries like the Netherlands has been significantly easier, and the previous 10% limit in Germany was often seen as a competitive disadvantage. „So far, this has not gained much traction among companies, partly because proxy advisors and other stakeholders view it critically. They argue that shareholder rights would be overly curtailed. It will be interesting to see if this view changes,“ says Beyer. He regrets the fact that the legislature has taken a step in the right direction to strengthen the capital market, but this has not yet gained acceptance.