Many companies are grappling with how best to conduct general meetings during the current COVID-19 pandemic in the light of emergency measures to slow down its spread. This article provides guidance for private and public companies under current law and practice, fast moving as the government announce further social restrictions daily, and has been updated to reflect the compulsory measures (the ‘Stay at Home Measures‘) prohibiting public gatherings of more than two people announced on 23 March 2020 (and passed into English law on 26 March) unless essential for work purposes.
The board and its shareholders should consider the following:
- Can a meeting be avoided by passing the resolution as a written resolution circulated to all members for consent (which may be given by email).
- Is the company required to hold an AGM at all under its articles of association. Consider a temporary suspension by amendment by written resolution (which will require the consent of shareholders holding 75% or more of the total share capital).
- Implement amendments to the Company’s articles of association to permit ‘virtual only’ meetings by dial-in audio / video technology (eg Zoom).
- If an AGM (or GM) must be held consider implementing the following procedures to limit the numbers of those who may attend:
- identify the minimum quorum required to attend and how best to select eg partners sharing the same household;
- encourage proxy appointments in favour of that quorum and make it clear that the attendance of others will not be permissible under the Stay at Home Measures;
- permit proxy voting by email;
- provide dial-in audio / video technology during the meeting to permit non-attending shareholders to participate remotely;
- chose a venue accessible by car and discourage use of public transport; if those who comprise the quorum live in the same household consider convening the meeting there;
- ensure strict social distancing protocols at the meeting;
- take the vote on a poll (not on a show of hands); and
- exclude any shareholder whose attendance is not required to form a quorum.
Many of the same factors apply. However, a public company cannot pass a resolution as a written resolution and is required under the Companies Act 2006 to hold an AGM each year (within 6 months of its financial year end).
For companies with December year ends, they must now plan for an AGM by 30 June 2020. This has raised concerns that the current AGM season will result in widespread disruption since many will not facilitate or permit virtual meetings.
The logistics for such meetings have been under active review and were considered in AGMs and the Impact of COVID-19 published by ICSA and The Chartered Governance Institute on 23 March as up-dated in a Supplement issued on 26 March 2020. This outlined various options that public companies can take including postponing or adjourning the meeting and revised guidance on how to conduct a meeting when one must be held. For such meetings the Supplement sets out the following guidelines:
- Attendance of shareholders. Shareholders will not be able to attend general meetings while the Stay at Home Measures are in force: their attendance (other than as required to form a quorum) will not fall within the “essential for work purposes” exception to the prohibition and they should be refused entry.
- Proxy voting. Instead of attending, shareholders should be encouraged to vote by proxy – appointing the chair of the meeting (not the chair of the board or a specific director who may be unable to attend) as proxy.
- Quorum. Keep to the minimum, generally two, under the company’s articles of association.
- Venue. The meeting can be held behind ‘closed doors’ – in extreme situations, this might be at the home of a director or employee, with that director or employee and a fellow householder (if not shareholders themselves) being appointed as proxies or corporate representatives for non-attending shareholders.
In the meantime, emergency legislation is under urgent review to facilitate virtual meetings and a FRC(Financial Reporting Council) and Department for Business and Energy and Industrial Strategy Q+A has just been published to assist companies planning for their forthcoming AGMs. The Strategy Q+A can be viewed here.
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