Coronavirus and Company Meetings
The change to everyday life caused by the Coronavirus pandemic is having a huge impact on the running of a business. A company has numerous statutory and compliance obligations, including potentially holding an annual general meeting, but how can these operate in an environment where public meetings are not allowed to take place?
AGMs provide one of the few opportunities shareholders have to question the board, engage directly with management, and hear the views of other shareholders. They are seen as very important, particularly for listed companies, for the general accountability of a company’s board.
However, it is important to remember that a large number of companies do not need to hold an annual general meeting. Although public companies must hold an AGM within 6 months of the end of their financial year, many private companies do not have such a requirement. Directors need to check the company’s Articles of Association to see what the requirements are for holding an AGM. If there is no requirement, business that is normally addressed in a general meeting can be dealt with in other ways, such as a written resolution or held over until a physical meeting can take place.
Where AGM notices have already been sent out, companies should tell their shareholders to check their website for updates regarding the AGM and also encourage shareholders to return proxy forms, as they cannot attend in person. They should also provide means for shareholders to ask questions ahead of the meeting and arrange for the AGM to be live streamed. Shareholders should also be informed that if the meeting does go ahead, it will not be held in the usual manner due to the bans on gatherings, travel etc.
An AGM can be postponed or adjourned if the company’s articles allow it, however this does not extend the six-month time period for calling an AGM (referred to above) and therefore, this may not be the answer. If the meeting is postponed or adjourned, there could be implications for the resolutions to be proposed, as existing authorities (for example share allotment and disapplication and buyback authorities) may expire (as they are often drafted to expire at the following AGM). This could also impact other annual AGM resolutions, for example, remuneration policy approval.
There may also be the option of a virtual general meeting, which can be held by conference call or on the web with no physical meeting taking place. If there is a virtual meeting, shareholders must be allowed to communicate in real-time. Although legally virtual meetings are allowed, the company’s Articles must not prohibit them, and ideally there will be provision to specifically allow virtual meetings.
There is also the possibility of a hybrid AGM, (which allows for shareholders to participate electronically as well as a physical meeting taking place), if a company’s constitution allows for it. Such a meeting will need all the relevant technology to allow the meeting to function and is likely to incur greater costs.
If a meeting is to be held, resolutions should be included to allow for shareholder consent to electronic communication and ensure that virtual general meetings can be held in the future. Do also note that Companies House has confirmed that it will automatically give companies a 3-month extension to file accounts without being penalised if the reason is Covid 19 related.
It is hoped that legal changes will be made to extend existing AGM deadlines, however currently there are no specific coronavirus provisions to negate the need for an AGM. Companies need to carefully check their Articles to see what is required, and those who are required to hold one should keep up-to-date with government advice, keep open communications with shareholders, encourage early proxy returns, allow for questions from shareholders prior to the meeting, as well as live-stream the meeting, and consider the practicalities if a meeting does actually have to take place.
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