Please note: The information in this article is correct as of 20/05/20. Due to the ongoing nature of the government guidance in relation to the coronavirus pandemic, advice is subject to change. While we will do all we can to ensure our blogs are up to date, it is always advisable to speak with a solicitor for specific advice.
Back in March, the government announced its intention to update legislation to enable those companies who are required to hold AGMs to do so safely during the coronavirus pandemic.
As we approach the end of May, the legislation has yet to be introduced but the government intends to do so “as soon as Parliamentary time allows.” The new legislation would allow AGMs to be held online or postponed where necessary. Companies should be aware, however, though the legislation relating to meetings is due to be backdated to take effect retrospectively from 26th March, it has been emphasised that companies should make their own judgements when deciding whether to hold their meetings and in what form they will take place.
New guidance from BEIS and FRC, in the form of Q&As, was released last week and provides some clarity. The full guidance can be viewed here.
If your AGM is due to be held before the legislation is officially introduced you will still need to notify shareholders or members of the meeting, even if you intend to delay it once the legislation come in to place. The advice is to keep shareholders and members informed of your plans.
If you hold your AGM virtually before the legislation is introduced, it cannot be guaranteed that votes held will be valid. BEIS and FRC explain “while it is our expectation that the legislation passes into law and applies retrospectively, we cannot guarantee this outcome. Therefore, companies and other bodies will need to take their own view on how to proceed.”
If your articles of association/rules require you to hold a physical AGM, this new legislation will allow you to temporarily override some of the requirements in your constitutional documents relating to the mode of the meeting. In the longer term, it is advised that companies and other bodies consider reviewing and amending their articles or rules “to determine whether additional flexibility is necessary.”
If you are a shareholder, you will still retain any existing rights to vote even if you have to vote in another way other than in person.
If you are a director, you should safeguard the interests of you shareholders/members by thinking about what is best for their safety and well-being. You should consider the best way to fulfil your obligations to engage with your members in a way that will not put them at risk.
In terms of timescale, the flexibilities offered by the proposed legislation are due to be available until the end of September. BEIS and FRC have emphasised that the government is regularly reviewing the restrictions in place in response to the coronavirus pandemic so these deadlines can change depending on what measures are put in place, as the government continues to relax the lockdown. Initially, the September date was given as that is when most companies are anticipated to have their AGMs prior to.
It’s important to check your current Articles of Association to ensure what the position is. If your Articles are silent as to the holding of AGMs then the provisions will be governed by Model Articles for companies incorporated after 2009 or by Table A for companies incorporated prior to that. Most modern Articles do not require an AGM to be held and some provide for all documents that would normally be approved by an AGM to be sent out electronically. It isn’t a case of one rule fits all and therefore it is important that if you have a body of shareholders not involved in the day to day running of the company that you do correctly follow your AGM procedure.
For legal advice on holding AGMs or other general meetings during COVID-19, please get in touch with Farleys corporate team who will be happy to assist. Call 0845 287 0939 or contact us through our online form.