The UK Government have proposed to introduce legislation to help companies alleviate the difficulties they are facing in meeting statutory obligations to hold shareholder meetings during this Covid-19 pandemic.
On 14th May 2020 an update was provided in respect of this proposed legislation. It was confirmed that the legislation is to be introduced as soon as Parliamentary time allows, measures in the legislation relating to meetings will take effect retrospectively from 26 March 2020 and the proposed temporary suspension of wrongful trading liability will continue until 30 June 2020. Following this update we respond to some frequently asked questions as follows:
What should we do if an AGM is due but the legislation has not yet been passed?
If there is a date by which an AGM is required to be held and the proposed legislation has not been passed by that date, the company should still call the meeting, even if it is likely to be delayed once legally possible. All Shareholders must be informed of what the companies’ plans are in relation to these meetings.
Do meetings need to be held in accordance with constitution documentation?
Legislation will allow companies to temporarily override certain requirements in their constitution relating to the way in which their meetings are held. Companies will have until the end of September 2020 to hold their AGMs, with the government being able to make further extensions in due course.
How should the meetings be held?
Directors should explore all of their options to provide the best level and quality of engagement they can reasonably expect. This means that where a physical meeting cannot be held, efforts should be made to hold the meeting virtually allowing as many members as practicable to engage and exercise their voting rights. Further guidance in respect of this will be provided by BEIS and FRC in due course.
Is the legislation different for companies required to hold AGMs under their constitution to those companies who are required under legislation?
Both companies who are required to hold AGMs under their constitutions and companies required under legislation will be treated with the same grace. Please note that companies who are required to hold AGMs under legislation will be given the flexibilities until the end of September.
It is advisable that companies review their constitutional documents to establish whether additional flexibility should be added to cover the eventuality of situations like we are experiencing now recurring in the future.
If you would like professional help or advice on any of the aspects mentioned above, our corporate team are on hand to help you. Please contact Sukie Shemar on 01922 720 333.