If a company’s annual general meeting date arises over the next few months, the Covid-19 emergency will need to be factored into meeting plans.
There are options available to the company’s board to ensure that social distancing is adhered to while complying with the company’s statutory obligations. Similarly, if a company is required to convene an extraordinary general meeting of shareholders, there are options available to companies such as obtaining the approval of shareholders through a written resolution or by means of proxies. These options are discussed below.
Annual General Meeting (AGM)
It is compulsory under the Companies Act 2014 (the Act) for companies to hold an AGM of its shareholders. An AGM is an important means for shareholders in a company to engage with management through its directors and to review the company’s financial position.
Extraordinary General Meetings (EGM)
It may also be necessary for a company to convene an EGM in order to obtain shareholder approval under the Act. EGMs are an important method to deal with urgent matters which may arise in the months between AGMs.
With social distancing restrictions likely to continue for the next few months, company directors may wish to consider alternatives to holding shareholder meetings in person.
Postponement of AGM
If possible, a simple way to abide by the Government’s social distancing regulations would be to delay the AGM until it is safe to meet in person. However, this is only possible for companies whose constitution allows for this.
It should also be noted that Section 175 of the Act states that AGMs must be held within 15 months from the date of the last AGM and so postponement of the AGM is not an option for any companies which are approaching that date.
A newly incorporated company which held its first AGM within 18 months after the date of the company’s incorporation, does not need to hold an AGM in the year of its incorporation or in the following year.
Proxies at an AGM or EGM
If the AGM or EGM must go ahead at a physical location, attendance should be kept to a minimum while ensuring the relevant quorum is present in person or by proxy according to the constitution.
Shareholders should be encouraged to submit their votes in advance of the meeting by proxy. The form of proxy is set out in Section 184 of the Act. This should ensure alternate proxy holders may be appointed in the event that a proxy holder becomes unavailable at short notice.
Holding a shareholders’ meeting remotely
While there is no express provision in the Act to permit an AGM or EGM to be held remotely, a company’s constitution may permit this. If so, electronic methods, such as video conferencing, may be used to deliver the information to shareholders while still holding the meeting in a physical location. Shareholders should be given an opportunity to participate in the meeting, perhaps being issued with the agenda of the meeting prior to it and submitting questions in advance of the meeting.
Section 176 of the Act states that where a shareholders meeting is to be held inside or outside of the state, the company has a duty to ensure that all members can participate by technological means. The obligation and expense of ensuring all members can participate is on the company.
Written resolutions in respect of an AGM and an EGM
Under Section 175(3) of the Act, a company does not need to hold an AGM in a year where all members entitled (at the date of the written resolution) to attend at vote at such a meeting, sign a written resolution under Section 193 of the Act:
- acknowledging receipt of the financial statements that would have been laid before that meeting;
- resolving all such matters as would have been resolved at that meeting; and
- confirming no change is proposed in the appointment of the person (if any) who, at the date of the resolution, stands appointed as statutory auditor of the company.
The resolution must be signed no later than the latest date for holding of the meeting.
Similarly, Sections 193 and 194 of the Companies Act provides for ordinary and special resolutions to be passed by way of a written resolution as if it was passed at a general meeting, obviating the requirement to hold an EGM.
Section 193 requires all members who would be entitled to attend and vote at a general meeting to sign the resolution. The resolution will be deemed to have passed on the day the last member signed it.
Under Section 194, a majority written resolution must be signed by members who, at the time of signing, represent at least 75% of the total voting rights of all members who at that time, would have a right to attend and vote at a general meeting. The resolution shall be deemed to be passed at a meeting 21 days after the date on which the last member signs it.
It should be noted that certain resolutions, such as the removal of a director or auditor, cannot be done by way of written resolution and must be passed at a shareholders meeting.
About the author: Katie Oakes, Solicitor on the Corporate and Commercial Team