In light of the challenges presented to companies as a result of the COVID-19 outbreak, the Chartered Governance Institute has published guidance to help companies to consider their contingency plans. The guidance offers suggestions reflecting UK company law and regulation, but companies need to consider their own individual circumstances including their articles of association.
Companies have been given 5 options:
- Adapt the basis on which you hold the AGM
- Delay convening the AGM, if notice has not yet been issued
- Postpone the AGM, if permitted under the articles of association
- Adjourn the AGM
- Conduct a hybrid AGM, if permitted under the Articles
Due to the unprecedented measures implemented to reduce the impacts of Covid-19, all public gatherings of more than two people have been banned until 13th April, with the understanding that this period could be extended if deemed appropriate to further contain the spread of Covid-19. We would therefore recommend that, unless absolutely necessary, companies postpone their AGM. If, for example, a company has a 31 December year-end, we would recommend that they hold their AGM in June, regardless of in which month the AGM has previously been held. We would also recommend that companies implement a number of other measures to encourage remote shareholder participation, specific examples as detailed in the remainder of this article.
Postponing the AGM
As highlighted above, ONE Advisory is recommending that companies postpone their AGMs wherever possible. If a company is planning to postpone their AGM they need to consider that, as a matter of company law, their AGM must be held withing six months of their year end: for a lot of companies with calendar year ends, their AGM must be held by 30 June 2020. The AGM Notice must also be given not less than 21 days before. Beyond this, the level of flexibility companies will have in relation to holding their AGM will largely by dictated by the provision of their articles, so reviewing your articles should be the fundamental first steps taken.
Holding a virtual AGM
Some companies have the option of holding a virtual AGM, or a ‘hybrid’ AGM (where there is a physical AGM with an option to attend virtually). If allowed by the company’s articles, a hybrid AGM is a good alternative that allows shareholder to attend remotely. However, hybrid/virtual AGMs must be expressly permitted in the company’s articles – many AIM companies do not have such a provision in their articles. We would suggest that companies include a resolution that amends their Articles to allow for hybrid AGMs in their Notice.
If there is a government mandated lockdown restricting gatherings and travel, it will present challenges for an AGM. If it is a limited lockdown ending before 30 June, companies should consider adjourning the AGM (if permitted within their articles). If this is not possible, the following key issues should be considered:
- whether a quorum is present;
- who will chair the meeting in the absence of the Company’s Chair;
- whether the meeting location can be changed; and
- if there is an overflow location.
There are several steps for ensuring that the Company complies with their legal requirement to hold an AGM whilst encouraging shareholders to follow government advice and remain at home. Some such steps include:
- encouraging shareholders to submit proxies in advance of the meeting;
- holding a supplementary shareholder meeting, once the social distancing recommendations have been lifted by the Government, to allow provide shareholders with the opportunity to speak to the Directors;
- invite shareholders to submit written queries in advance of the meeting, and post responses on the Company’s website; and
- live-stream the AGM.
Notwithstanding that an AGM is a legal requirement, companies should always ensure the safety of their shareholders is paramount, and encourage all shareholders to refer to the Government’s official guidance in any notifications of announcements they release (www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public).
For further guidance on the options available to you for your AGM please contact email@example.com.