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General Meetings and COVID-19

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09/04/2020

As annual general meeting (AGM) season gets underway, company secretaries are asking themselves if and how AGMs can be held whilst the coronavirus pandemic continues and restrictions on movement and public meetings apply in the UK.  The UK’s current prohibition on non-essential travel and public gatherings of more than two people means that companies will need to re-consider how their AGM is held, and we set out below some of the practical steps public companies (and private companies which are required by their constitutional documents to hold an AGM) may wish to take in planning for, or holding, an AGM.

Planning

  • Delay convening the AGM – if notice of the AGM has not been issued yet, consider whether the meeting can be delayed. However, public companies should note that they are required to hold an AGM within six months of their financial year end, and existing authorities (such as an authority to allot shares) may expire a certain number of months after they were granted – so indefinite delay is very unlikely to be an option.
  • Postpone the AGM – if notice of the AGM has been issued, a company can postpone the AGM if allowed by its articles of association (articles) (and if a postponement is permitted, the provisions of the articles of association should be carefully followed). The postponed meeting must be held within six months of the company’s financial year end, so a postponement may be of little practical use.
  • Communicate with shareholders – a company should ensure that its communications with shareholders are clear and unambiguous. If a company has issued its AGM notice and arrangements for the meeting need to change (for example, if the original venue is no longer available), the company should notify its shareholders of any changes which are made as soon as practicable.
  • Encourage proxy voting – companies should consider encouraging shareholders to vote at the meeting by proxy, and companies may wish to specify in AGM notices that shareholders should appoint the chairman of the meeting as their proxy (as any other proxy is likely to be refused entry to the meeting).
  • Hold a hybrid AGM – a company’s articles may allow a hybrid meeting to take place (that is, a combination of a physical and an electronic meeting). However, if the articles do not explicitly allow for a hybrid meeting, it is recommended that this approach is not followed.

Conduct of meetings

  • Restrict the number of attendees – as public gatherings of more than two people are currently prohibited in the UK, companies should ensure that their AGM notices specify that shareholders are likely to be prevented from attending the AGM in person, and that shareholders are actually prevented from attending the AGM if their attendance would cause that prohibition to be breached.
  • Ensuring the AGM will be quorate – the quorum for an AGM is generally set out in a company’s articles, and is often two members present in person or by proxy. Companies should consider how they will achieve this quorum given the current restrictions.  It may be that two directors who are also shareholders can form a quorum, and the proxy votes submitted prior to the AGM can be cast by one of those directors.
  • Live streaming – companies should consider whether it is possible to provide a live stream of the AGM to shareholders, either through a dial in or video link. Companies should note, however, that shareholders will not necessarily be deemed to attend an AGM if they choose to participate in this way.

Possible legislation and guidance

The UK government has announced that it will introduce legislation to ensure that AGMs can be held safely and consistently with the current restrictions on movement and gatherings. This legislation is not expected imminently, and it remains to be seen whether it is introduced in time to assist companies currently considering issuing their AGM notices.  In the meantime, The Chartered Governance Institute has issued guidance, and a supplement to that guidance, on contingency planning for AGMs during the current pandemic.

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