Respect Gwenzi
Social gatherings have been cancelled, universities are moving classes online, and more companies are instituting mandatory telecommuting policies. These include social media giants Facebook and Twitter, Google, and Salesforce who have each asked their employees to work from home in recent weeks.
If Covid-19 is going to change the world as some have hypothesised, it surely will also change the way companies, particularly those that listed on the stock exchange, do investor conferencing. Over the past two months, we have witnessed a flurry of corporate activity online mainly limited to Annual General Meetings.
A majority of the 61 counters listed on the Zimbabwe Stock Exchange conducted their Annual General Meetings in virtual setups while those outstanding are yet to follow a similar route in line with their annual calendar.
These undertakings have followed mandatory obligations which listed companies have to follow. Typically, most of the listed companies in Zimbabwe have a December year-end and their Annual General Meetings are supposed to be held by June of the succeeding year. The Zimbabwe Stock Exchange initially announced, late in March that it was giving listed companies an allowance to delay their scheduled AGMs.
With the realisation that Covid-19 was going to be with us for a prolonged period, the Zimbabwe Stock Exchange changed tact, encouraging companies to find ways of holding AGMs within the confines of Covid-19 regulations and laws guiding companies conduct. The period between June and August saw companies reorganise with a view to conducting respective AGMs on virtual platforms. By end of August most of the companies who had earlier indefinitely deferred AGMs rescheduled and successfully conducted these online. Thanks to advancements in technology, a number of video conferencing platforms have emerged over the years, which ultimately came in handy during this pandemic. ZOOM, a Silicon Valley-based video conferencing company started in 2011, stole the thunder. The application had a reported market share of 42.3 percent in video conferencing market share in the US as of April.
The number of daily users surged to 300 million in March 2020 as Coronavirus hit, which was 30 percent up compared to the December 2019 users. Millions of people chose Zoom over other platforms, driven by its ease of access and good user experience. However, the rapid growth in popularity has revealed some security flaws, including a vulnerability that allowed an attacker to remove attendees from meetings, hijack shared screens, and spoof messages from users. As a result, Zoom has been banned by governments for use on official business in Canada and Taiwan and numerous organizations including SpaceX and Nasa. Be it as it may, most of the AGMs conducted by ZSE companies to date have been conducted via ZOOM. Only First Mutual Life a listed financial services group preferred a conventional AGM.
The majority shareholder NSSA, holds over 60% and its free float is not that significant, perhaps informing the preference for conventional conferencing. The market solution for virtual AGMs in Zimbabwe has been mostly dominated by Transfer Secretaries.
Typically transfer secretaries maintain a company’s share register and are responsible for managing AGM proceedings. Corpserv, a subsidiary of Escrow, dominated the space through its eagm platform. The company migrated the software solution from its related service in East Africa, where it has already been in use.
Corpserv thus achieved an early mover advantage providing an online platform allowing shareholders to view AGM agenda items and on one half of the screen the visual presentation of proceedings by the board. Typically, such systems would provide minutes of attendees and a transcript of the proceedings. Companies have increased their reach as more shareholders attend virtually without the hustles of traveling.
The cost of conferencing, which typically involves booking hotel ballroom venues, has been reduced, while the cost of time involved in the planning process has been reduced. The virtual solution has also catalysed local companies’ adoption and acceptance of visual interfaces with stakeholders. In the past, most companies have been very hostile and against letting their engagements with analysts or shareholders beamed in visual form, perhaps for the avoidance of scrutiny by the public. Our take is that the preference for virtual platforms in the undertaking of business and conferencing is here to stay. In other established markets, this had already been a preferred route as opposed to conventional physical engagements. The global dynamics has been largely driven by geographical factors. The US has two prime stock exchanges the New York Stock Exchange and the NASDAQ which are both located in New York.
However, the US markets attract investment from all regions across the world and over 20 percent of the stock market investments are owned or managed by entities outside the USA. To effectively communicate with the investors, US companies have long used conference calls to address analysts and shareholders over which they present their results and attend to questions.
Respect Gwenzi is the lead analyst and Managing Director at Equity Axis.
This article was first published under the same headline by the Zimbabwe Independent as part of the 2020 Quoted Companies Survey report in September 2020.
