Despite the current COVID-19 measures being less extreme than the full lockdown measures which the government put in place in March, it remains undesirable to run the health and safety risk of a physical shareholder meeting. Under the Corporate Insolvency and Governance Act ("CIGA"), which became law on 26 June 2020, there are temporary relaxations on the holding of general meetings which allow companies to limit physical shareholder presence.
CIGA includes measures to assist companies in holding general meetings while minimising COVID-19 risk. These include:
(a) the ability for a closed AGM with a minimum quorum of shareholders (usually two);
(b) the ability for shareholders to attend remotely without the requirement for all shareholders to have access to an electronic meeting and electronic voting, which can be complex and costly; and
(c) the ability to hold a fully "virtual" meeting (i.e. without the requirement for a physical place of meeting).
The company should make it clear in its notice of the meeting, or by RIS announcement and on its website where the notice of meeting has already been published, that shareholders cannot attend the meeting in person and should attend by proxy. The wording should make it clear that anyone seeking to attend the meeting will be denied entry.
Even prior to CIGA coming into force, many companies held their AGMs with a minimum quorum present at the intended venue, or an alternative venue, and instructed shareholders to vote by proxy rather than attending the meeting.
The measures set out in CIGA which grant flexibility in relation to the holding of general meetings have been extended to apply to general meetings held on or before 30 March 2021.
Postponement or adjournment
CIGA allowed companies whose AGMs were due between 26 March 2020 and 30 September 2020 to delay holding their AGMs until 30 September. This period has not been extended and companies must, therefore, hold their AGMs within the usual time limits set out in the Companies Act 2006.
As the restrictions around COVID-19 continue to evolve, it may be that companies need to make changes to the time, place or format of their meetings after the notice has been sent.In such a situation companies have the following options:
Postponement: The articles of association may allow postponement of the meeting. The company will need to comply with the requirements of its articles as regards publicising the postponement and new arrangements.
Change of venue: The company's articles may allow it to change the venue of the meeting without the need for an adjournment as set out below. If this is not the case then a quorum of shareholders will need to open the meeting at the original venue in order to adjourn to a more suitable one.
Adjournment: If the company's articles do not allow it to postpone the meeting, then the chair and sufficient shareholders to constitute a quorum should attend the venue (remaining outside if necessary) in order to adjourn the meeting to a date and time, and/or a venue, that the company considers practicable. The chair will generally hold sufficient proxies (giving discretion on procedural motions) to allow an adjournment motion to pass.
Time-sensitive matters: If a meeting is to be postponed or adjourned, companies will need to check that the expiry dates of their existing share capital authorities (e.g. the authority to buy back shares) do not affect any planned corporate actions or existing programmes. In most cases it will be preferable to go ahead with the meeting as planned if possible.
Can members attend remotely?
CIGA provides that companies may hold fully virtual or "hybrid" meetings (i.e. meetings where there is a physical meeting but members can attend electronically instead of being physically present). If the decision is taken to hold a virtual or hybrid meeting and all shareholders are permitted to attend, the notice will have to contain the procedures which shareholders will need to follow in order to attend electronically.
Hybrid meetings have historically been quite rare, and there is a limited number of service providers. Therefore if a hybrid meeting is proposed, arrangements should be made as soon as possible.
As an alternative to a hybrid meeting, some companies are providing for members to join a call or a live-stream webcast so that they can follow the proceedings remotely, although they will not count towards the quorum or be able to vote at the meeting (other than by proxy). Other companies are simply providing for shareholders to submit questions to the board in advance of the meeting.