Last week, GCM Resources plc announced it would hold its AGM this year on 25 February but that ‘due to the ongoing COVID-19 pandemic, the AGM will be held virtually as a closed meeting with a minimum number of directors and shareholders present, such that the legal requirement to hold a quorate meeting will be satisfied; and no other shareholders will be permitted to access, attend or participate either in person or virtually.’ It goes on, ‘As a consequence of the current COVID-19 restrictions imposed by the UK Government, shareholders will not be permitted to attend the Annual General Meeting and will only be able to vote by proxy. This year, only the Chairman of the Meeting may be appointed as a proxy.’
The UK Government’s Financial Reporting Council published a Corporate Governance report in October 2020 examining the varying practices of UK companies in responding to legislation limiting gatherings in the light of COVID-19. The report ‘AGMs: an opportunity for change‘ explicitly criticised this kind of arrangement: ‘The use of closed meetings without any additional opportunities for shareholders to engage – although legal – effectively disenfranchises retail shareholders from their right to hold boards to account, and such meetings are not aligned with the importance of shareholders engagement set out in the UK Corporate Governance Code.’ (Page 9)
The board of GCM Resources certainly needs to be held to account. Its shares were temporarily suspended from trading on the London Stock Exchange’s Alternative Investment Market (AIM) in January when its NOMAD (Nominated Advisor) suddenly resigned, with no reason being given. All AIM-traded companies have to have a registered NOMAD, and it took GCM some days to lure another advisor in to take on the role. GCM’s only asset is a coal deposit in Phulbari, Bangladesh, where it has no licence to mine and where it faces massive opposition from the tens of thousands of people who stand to be forcibly relocated if a mine should be constructed. The company is currently relying on agreements with Chinese energy companies to remain in business.
The Financial Reporting Council’s report goes on: ‘Shareholder rights are best served by companies that provide highly effective and clear communication before, during, and after the meeting, and allow full participation from those shareholders that wish to attend, either in person (when this is possible) or virtually.’ (Page 11)
London Mining Network wrote to GCM Resources on 1 February urging it to hold some kind of online engagement session for its shareholders. We pointed out that, as a company with a rather limited number of retail shareholders, such a meeting could easily be hosted on Zoom. We noted that, in the light of GCM’s continual financial losses, if it were unable to afford a Zoom account of its own, London Mining Network may be able to consider hosting GCM’s AGM on our own Zoom account. We have received no reply to date. We assume, therefore, that GCM Resources is deliberately trying to evade engagement with, and accountability to, its own shareholders. It remains, as it always has been, a model of poor corporate practice.