There are understandably times when, working in a business, meetings have to take place. Unfortunately, sometimes a company’s articles do not allow for these to be carried out remotely, especially in the case of Annual General Meetings. However, the relevant bodies have been putting their thinking caps on and trying to think of how this can be dealt with considering the current situation. We have summarised the current guidance, but of course, this is subject to change on a daily basis, and it is worth checking for any updates before making any decisions as to how to go ahead.
On 27 March 2020, the Chartered Governance Institute published supplementary guidance to how AGMs should be conducted during the lockdown imposed due to Covid-19.
It suggested an approach for listed Companies to hold a valid general meeting in light of the stay at home measures which prohibit gatherings of more than 2 people.
Following this, on 17 April 2020, BEIS and the FRC published a document concerning measures in respect of AGMs and general meetings.
With this in mind, how can shareholder meetings go ahead, and what are the restrictions that may be faced?
Shareholders cannot attend general meetings while the stay at home measures are in force, as attendance will not fall into the category of “essential for work purposes” exception.
Therefore it is recommended that companies ensure that in the notice of any meetings and wherever the notice has been published, it is made clear that shareholders are not to attend in person, will be refused entry and should vote by proxy.
Companies should also provide information about how the shareholders can remain engaged throughout the meeting and questions to directors can be asked.
Details of any proposed changes are still being discussed, but it is envisaged that companies will be able to go ahead with “closed” meetings with a minimum number of people by way of telephone or other ways of communicating. It may even be possible for Companies to override their Articles for a short period.
Will the meeting still be quorate?
A quorum (as set out in the company’s articles) will need to be present for any resolutions to be passed. It will need to be checked in your company’s articles to see how many shareholders are required to be present in order for a quorum to be present at a meeting, however generally the quorum should be able to be satisfied by two shareholders attending, with any resolutions being passed by proxy votes and the votes of those in attendance. If physical presence needs to be more than two, then the number should be kept to the minimum.
Where should it be held?
If a meeting has already been set at a venue that has become unavailable, and the articles allow the board to postpone the meeting or move it, it should be considered whether moving it to a more controlled venue is possible. Companies that do not have allowances for this in their articles should adjourn the meeting to an alternative venue, which could be achieved by the employees/others who plan to form a quorum attending the planned venue and adjourning to another venue. However, this is not always possible, and advice should be taken.
Can an AGM be held electronically?
If the company articles permit this, then yes.
If the AGM notice has been issued already, the company could change to a hybrid AGM. An announcement should be made and the website (if this is where the notice of the AGM is placed) should be updated. Shareholders should be made aware by the company that they can participate fully in the AGM electronically. The suggested issues for adapting the basis on which the AGM is held should also be considered.
Should AGMs be postponed?
The document produced on 17 April discussed whether the deadline for AGMs should be extended. Currently the advice is that while the option to delay is anticipated to be provided, it is expected that most companies will want to go ahead as planned to ensure normal business is carried out in a timely fashion.
If you are unsure about whether to go ahead with your AGM or general meeting, and whether you are doing so in line with the current guidance, please let us help you.
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