Navigating the new normal

Coronavirus and AGMs – Public and Private Companies


All content on this page is correct as of March 30, 2020

COVID-19 has caused and continues to cause unprecedented disruption. One possible consequence for both public and private companies is the cancellation or rescheduling of AGMs and / or other general meetings (a meeting of the company’s members or shareholders, hereafter referred to as shareholders).

A public company must hold an AGM within the period of six months of its accounting reference date. For example, if the company’s financial year ends on 31 December, the AGM must be held by 30 June of the following year. A private company is not required by the Companies Act 2006 (CA 2006) to hold an AGM but it might be required to do so by its articles of association.

If your company is holding an AGM in the near future or is in the process of planning one, we have listed below some points to think about and practical steps you may wish to take in light of the current situation.

Check your articles of association

The first step is to review your articles of association for any relevant provisions. For example, directors may have the explicit power to:

  1. Impose appropriate restrictions on meetings to ensure security, safety and orderly conduct;
    • Organise meetings at different locations; and
    • Allow shareholders to attend a meeting remotely (using video conferencing facilities) even if their presence or level of interaction does not meet quorum requirements.

General information / updates

You may wish to dedicate a page on your website for shareholders to obtain general information and updates on the AGM. A Q&A section for shareholders to ask questions might also be a helpful way to answer any frequently asked questions.

General safety measures

If thought fit, the board could require, for example, temperature checks or self-certification from attendees. The board may also choose not to serve any refreshments or complimentary offerings.

Notice of the meeting

For a public company, an AGM must be called by notice of at least 21 days. For those public companies that are also subject to the 2016 UK Corporate Governance Code, the notice period for the AGM should be 20 working days. For other general meetings, 14 working days’ notice is required. The articles may provide for longer notice periods.

If notice has not yet been sent, the company may notify shareholders of a proposed date and location but delay sending formal notice of the meeting until the situation becomes clearer. This will provide the company with some flexibility to change the date / location until the deadline for formal notice.

Changing the Date and Time

If the AGM or general meeting has been scheduled and circumstances change before this date, the directors do not have any inherent power to postpone the meeting.

The articles of association may provide them with the power to postpone the meeting and details of the procedure to be followed. For example, the articles of association may only require notice of the change to be sent by email or it may only require the new date, time and location to be printed in a national newspaper.

If the articles of association do not explicitly allow postponement, the AGM would go ahead as planned. In this situation, the articles may allow the company to adjourn the meeting to another date. If the company intends to postpone the AGM in this manner, it could let shareholders know through its website or via email to avoid any unnecessary travel.

Additionally, other practical issues need considering including, for example, the cancellation policy of the venue at which the AGM was to be held. This may require re-negotiating based on how the Government’s advice changes over time.

Location

Hybrid meetings or AGM:

  • A hybrid meeting or AGM is one in which attendees are given a choice of attending at a physical location or via video conferencing. In line with Government advice, a hybrid meeting could help restrict the number of attendees at any one location.
  • This would also be helpful for companies that may require a physical location for the meeting but would like to encourage shareholders to listen-in or participate remotely.
  • Check your articles of association for any limit on the number of places from which invitees can attend. This may impact the number of attendees dialling-in that can count towards the quorum.
  • Further to the above, it is important to check if the articles of association provide any other limitations in relation to quorum. If, for example, attendees need to be able to speak and be heard to count in the quorum and they are unable to do this on a video conferencing platform, then their presence is unlikely to constitute formal attendance. If the articles provide that only one or two participants present and eligible to vote would meet the requirements, then only one or two people may need to be present at one location and all others might be able to listen-in even if their presence does not constitute formal attendance.

Fully virtual AGM:

  • A virtual-only meeting is one in which all participants join virtually.
  • It would be advisable to proceed with such a meeting only if the articles of association include an explicit provision for the AGM to be held in such a way.
  • Ideally participants need to be, for example, present, able to speak, be heard and vote at a meeting. If the company does not have access to a sophisticated video conferencing platform which provides all the relevant functionality, it is unlikely that a meeting can be held on a virtual-only basis.

Participation

If the articles allow for proxies to count towards quorum, we would suggest encouraging as many proxy votes as possible. 

The company could use a pre-registration process to ascertain the number of shareholders likely to attend.

As noted above, a live stream of the AGM could provide shareholders who are self-quarantined or unable to travel, the ability to view the proceedings. Depending on the functionality of the platform used, shareholders may not be able to vote and participate fully and accordingly their presence might not constitute formal attendance.

If some or all directors are unable to attend an AGM in person, they could be available remotely to answer questions via video link.

The company could consider hosting a form of shareholder event later in the year. This will provide shareholders with another opportunity to engage with the directors in person if the AGM is held in a more virtual format.

Impact on the business of the meeting

Depending on how the situation progresses, it is not beyond the realm of possibility that the Government may legislate to extend statutory deadlines for holding AGMs. This might be welcome news, but it will be important to consider any authorisations granted at previous AGMs which are due to expire this year. In such a situation, it will be prudent to seek legal advice as potential solutions will vary based on the company’s individual circumstances.

If you have any questions contact Natalie Knight-Wickens ([email protected]) or Riya Viegas ([email protected]).  If you are looking for information specifically in relation to charities, an insight from Philip Kirkpatrick, Head of Charity and Social Enterprise is available here.


This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of March 30, 2020.

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