“Balancing Technology and Tradition”: Virtual Only vs. Hybrid AGMs

In the digital age, the shift from traditional in-person annual general meetings (AGMs) to virtual meetings has become a hallmark of efficiency, convenience and cost effectiveness. During the COVID era, virtual only meetings provided companies the best method of ensuring their AGMs were conducted in the safest possible manner. Germany was no exception as companies embraced the virtual only meetings, touting not only the safety they provided but also the environmental benefits and cost savings realized from reduced travel.

Despite these benefits, shareholders have raised concerns about virtual-only meetings, primarily focused on the lack of personal interaction and opportunities for engagement. Technological glitches in the 2023 AGM season were also a common occurrence and cited by many investors. Considering these concerns, shareholders have been increasingly calling for companies to provide an in-person option and the associated benefits that direct communication provides.

In 2025, many leading German companies still utilize this cost-savings rationale to avoid having in-person or hybrid annual general meetings. During the 2025 AGM season, eight DAX40 companies will hold or are scheduled to hold the virtual only AGM, and the numbers are even higher in the MDAX 40 with 22 companies opting for the virtual-only arrangement. Unfortunately, from many investors’ perspectives, German companies have been too slow to revert to the traditional in-person or a hybrid AGM format.

Many German companies didn’t hold in-person AGMs physically since the pandemic and there is currently no commitment from their boards to provide that option in the foreseeable future. If anything, commitments made by companies for a hybrid or in-person meeting have tended to be ambiguous and vague at best. One MDAX company even went back on its 2024 commitment to host its 2025 AGM in-person. 

Market Context

In July 2022, the German government passed a new law allowing virtual only general meetings to be held permanently. Specifically, the bill introduced a new paragraph into the German Stock Corporation Act (§118a) stating that the articles of association may authorize the management board to provide for general meetings to be held without the physical presence of shareholders or their proxies. Such authorizations are limited to five years.

Many companies have used this opportunity to make the switch to virtual only meetings. To their credit, some companies have sought shareholder approval for two-year authorizations or have made the commitment to hold in-person or hybrid annual meetings at least once every three years. This can be seen as a response to the pressure being exerted by shareholder rights organizations and institutional investors. However, many institutional investors still view them as falling short of providing an optimal venue for all stakeholders to air grievances and engage with management and the board in a meaningful way. Companies are allowed to revert to a virtual only format when a contentious resolution item(s) comes up for a vote. Expect this pressure to rise as shareholders continue to feel dissatisfied by the slow pace of reversion back to an in-person meeting option.

Benefits of the Hybrid Approach

While it is true that the virtual meetings do allow for greater participation across a company’s shareholder registry as a greater number of international investors are able to participate, many investors believe that nothing can truly replicate the face-face interaction of an in-person AGM. These forums can offer invaluable opportunities for relationship building and direct engagement with shareholders. Investors also believe that the lack of an in-person option can be restrictive to their shareholder rights and that in-person attendance forms one of the foundations of good corporate governance.

A 2024 study by German retail shareholder association Deutsche Schutzvereinigung für Wertpapierbesitz e.V. (DSW) found that many virtual AGMs were plagued by technical issues, with 16 percent of the virtual participants saying they had problems during the technology test, asking questions and/or the transmission of the speech. This study also questioned the higher attendance rates touted by many companies as justification for continuing to hold virtual-only meetings.

Companies should continue to utilize the benefits of video-conferencing technology, especially as shareholder registries across Germany continue to become less concentrated and more geographically diverse. However, this should not come at the price of losing the benefits that only face-to-face meetings can provide. The adoption of a hybrid model as the standard for all AGMs would allow companies to maintain high levels of attendance while ensuring that shareholders have the appropriate venue to engage management and the board effectively.

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By Stephan Stegmueller (ISS-Corporate)

Stephan is a Managing Director, Head of Advisory EMEA & APAC with over 16 years of experience with ISS-Corporate. ISS-Corporate provides global companies with expert advisory, data, and technology solutions to strengthen governance, sustainability, executive compensation, and risk management practices.

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