October 2020 - MLP Law

Holding an AGM during Covid 19

It is coming to that time of the year when many companies will be looking to hold their Annual General Meeting (AGM). For those companies who hold their AGM in December, they will be considering the issues and looking to send notice to convene the AGM.

With the restrictions and social distancing already in place due to coronavirus and with the uncertainty of further restrictions set to be announced for the nation, we ask: “Can you still hold an AGM in the usual way?

Do your Company’s Articles state that you must hold an AGM?

A company’s Articles of Association (Articles) dictate if a company must hold an AGM and sets out the rules surrounding how and where to hold the AGM.  This is a legal requirement to which a company must adhere to.

Since restrictions and social distancing were introduced to the UK, companies have been looking to find a way to hold their AGM whilst still complying with their legal requirements/rules set out in the Articles as well as complying with the government’s lockdown rules.

The government has now introduced some temporary legislation which allows a company to override its rules relating to AGM’s (in its Articles) so it can convene its AGM in a flexible way.

What does the TEMPORARY LEGISLATION say?

Notwithstanding anything in the company’s Articles, the temporary changes in legislation state: –

  • If your AGM was meant to be held between 26th March 2020 and 30 December 2020 (Relevant Period), you can now hold this meeting by electronic means and allow votes to be cast by electronic means.
  • The meeting doesn’t have to be held at a particular place nor does it need all the people to be in the same place.
  • Members don’t have to participate in the meeting other than by voting.
  • You can extend the period within which the AGM must be held by 3 months at a time (up to 5th April 2021).

What does this mean in practice?

  1. You can hold a VIRTUAL MEETING
PROSCONS
Allows everyone to attend virtuallyHeld like a “face to face” meetingCast votes virtuallyCan everyone access the virtual meeting?Is there a risk of security or compliance issues?There may be technical issues on the day so may not have the quorumHard to use if voting by poll

Think about holding a “hybrid” meeting where:

  1. the number of people required for the quorum attends in one place (with social distancing in place); and
  2. use a written resolution, sent round in the notice, so members can cast their vote by proxy.
  • Use a WRITTEN RESOLUTION in lieu of an AGM
PROSCONS
No need to hold an AGM Easier than convening an AGMPoll voting and proxy voting can both be counted Cannot be used to remove a director or auditor before their term of office expires (unless special notice is given (28 days)May not receive the required majority to pass the resolution  

Encourage early return of poll/proxy votes when sending the notice out.

  • POSTPONE AGM
PROSCONS
Potentially hold AGM as usual if restrictions/social distancing are lifted  Could potentially still be under government lockdown on 5th April 2021 (last date you can postpone until)Directors appointments may expire before you hold your postponed meeting  

If notice has already been sent out to convene the AGM, you can only postpone the meeting if your Articles allows for this – may be of little use given that a special resolution of the members of the company is required to update the Articles to allow you to postpone your AGM.

So additional consideration is required well before the proposed AGM date/notice is sent to determine which is the best option for your company and ensure the relevant process is agreed and put in place in good time.

For help and advice on convening your AGM, please speak to our Corporate team on 0161 926 9969 or email corporate@mlplaw.co.uk

Delays at the Probate Registry

Are delays at the Probate Registry all too familiar for probate practitioners?

Delays at the Probate Registry first began in 2019 when a proposal to increase probate application fees caused an influx of applications, with practitioners fast-tracking their cases to submit their probate applications before the amendment of fees. In the Government’s proposal, probate fees would rise with the value of the estate, for example, estates worth £500,000 to £1 million would pay a £2,500 probate fee, which is a significant increase from the current fixed probate fee of £155 for all estates. The Law Society actively campaigned against this proposal and in October 2019 the government scrapped its plan.

However, coinciding with the increase in probate applications, HM Courts & Tribunals Service closed 18 sub-registries as part of the government’s £1 billion modernisation programme, which, unsurprisingly, caused further delays.

How has Coronavirus impacted the Probate Registry?

According to a report by the Independent newspaper ‘Coronavirus has made it harder to clear this backlog because many probate registry offices have been not working at full capacity due to staff absences and remote working practices…If mistakes are then made by probate registries under pressure, such as getting the name of an executor and the value of an estate wrong on a grant, the estate cannot be distributed’1.

The delays at the Probate Registry are also having an impact on banks. In the past, banks would require a Grant of Probate for funds over £50,000 or less (dependant on the bank’s policy); however, some banks are now releasing much larger amount of sums, up to £100,000, without requesting sight of the Grant of Probate.

HM Revenue & Customs and the Probate Registry have introduced new processes at the start of the Coronavirus pandemic to improve their services during these unprecedented times. Pre Coronavirus, all Inheritance Tax returns were stamped and returned either to the law firm acting or the Probate Registry where the probate application had been made. Since lockdown, HMRC introduced a new electronic process for dealing with the Inheritance Tax returns and they are now sent via e-mail to the Probate Registry. This new process is not without its flaws. Law firms are not being notified when an Inheritance Tax return has been sent to the Probate Registry and the Probate Registry are not allocating Inheritance Tax returns to the probate application correctly and, therefore, not progressing the application.

How has MLP Law responded to the Probate Registry delays?

Jane Hunter, Private client Partner at MLP Law said, “the team have been working extremely hard to continue to provide a first class service to our clients during the covid crisis.  The delays experienced have been frustrating for all of us and our clients”.  James Kenny, one of our Paralegals in the Private client team at MLP Law has experienced the day to day delays with the Probate Registry, HMRC and Royal Mail. James told us, ‘unfortunately, at present these significant delays have resulted in Grant of Probate/Grant of Letters of Administration application timescales being increased to at least around 2-3 months before a Grant is obtained from the Probate Registry to administer the deceased’s estate. This timescale can however be longer in some instances.’

‘There have also been issues with post being lost or misplaced when in transit to and from HMRC’s Inheritance Tax department and the Probate Registry. On multiple occasions, we have had to resend documentation to them or request further copies of documentation to be sent to us.’

The Probate Registry helpline advises that it is currently taking at least 8 weeks to progress Probate applications and requests probate practitioners do not get in touch until this time period has lapsed. At MLP Law, once this time period has passed, we are actively chasing the Probate Registry on a weekly basis to ensure our client’s matters are progressed.

A bereavement is a very stressful and emotional time for family and friends of the person who has passed and our aim at MLP Law is to take on any unnecessary stress and help our client’s manage their loved one’s affairs.

Amendment to Job Support Scheme

Chancellor Rishi Sunak has announced a further amendment to the Job Support Scheme (JSS), which is due to begin on 1 November 2020 and be available for six months, with a review in January 2020.

When originally announced, the JSS required employees to work a minimum of 33% of their normal hours. This has now been reduced to 20%, meaning that employees working as little as one day a week are now eligible for the scheme.

Additionally, the employer contribution to the ‘unworked’ hours has been significantly reduced from 33% to just 5%. This could have a huge impact on businesses and enable more employees to be kept in work.

Employers will continue to receive the £1,000 Job Retention Bonus.

No changes have been made to the JSS for those businesses legally required to close.   Those businesses will receive grants to pay two thirds of the wages of staff who are unable to work, up to a maximum of £2,100 a month but will still have to cover pension and national insurance contributions.

Please don’t hesitate to contact the team at MLP Law with ideas about topics or for detailed advice in connection with any of the issues raised. You can reach us at employment@mlplaw.co.uk or @HRHeroUK or on 0161 926 9969.

Job Support Scheme

To say that businesses have faced challenging times in the last few months is a vast understatement.  This MLP newsletter aims to summarise the financial support for employers that has been made available until now and going forward, with key dates for your business calendar.

The Job Support Scheme (JSS) is the less generous follow up to the CJRS, due to be available from 1 November 2020 for 6 months with a review in January 2021.  More details are due to be made available by HMRC but here is what we know at the moment.

Job Support Scheme – Open (for businesses that remain open but face reduced demand)

Here, the employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked.   Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government.  The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish.  The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

Job Support Scheme – Closed (for businesses that have been forced to close)

Where employers have been legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK, the ‘JSS Closed’ is available.  

This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/ or drink outdoors.

Businesses premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for this scheme.

Employers are only eligible to claim for periods during which the relevant coronavirus restrictions are in place.  Employers will not be able to claim JSS Closed to cover periods after restrictions have lifted and the business premises is legally allowed to reopen.  They may then be able to claim JSS Open if they are eligible.

Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish.

Financial Impact test for large employers claiming JSS Open

Large employers claiming JSS Open, defined here as a legal entity with 250 or more employees across their payrolls on 23 September 2020, need to complete a Financial Impact Test to evidence that their income has been impacted due to coronavirus.  If the employer’s turnover has remained equal or has decreased compared to the previous year, then they will qualify. This test only needs to be taken once before the employers first claim for the Job Support Scheme.  For more information, contact the employment law team at MLP.

Written Consent

It should be noted that, as with furloughed employees, you must obtain written consent from employees who are placed within either the JSS Open or Closed, as a temporary amendment to their terms of employment.

Job Retention Bonus

Employers can claim the Job Retention Bonus (JRB) from 15 February 2021 through the Government’s online claim service on GOV.UK.

The JRB is a £1,000 one-off taxable payment to employers, for each eligible employee that the employer furloughed through the CJRS and kept continuously employed until 31 January 2021.

Employers will be able to claim the bonus between 15 February 2021 and 31 March 2021.  Employers do not have to pay this money to the employee.

It is useful to note that employers may be eligible to claim the JRB for employees of a previous business who have been transferred under the TUPE rules.

Furlough and Flexible Furlough – A Recap

Prior to 1 November 2020, employers were able to furlough employees through the Coronavirus Job Retention Scheme (CJRS), which was in its original form from 19 March 2020. Under the original CJRS, employers could claim 80% of their employees’ wages (capped at £2,500), although furloughed employees were not to undertake any work for the employer whilst furloughed.  There was no obligation for employers to ‘top up’ employees’ wages, although furloughed employees were entitled to receive 100% of their usual salary during any period of annual leave of during their notice period. 

On 1 August 2020, however, the government introduced flexible furlough, allowing furloughed employees to work some of their hours and be furloughed for the remainder.  The amount of the contribution required by the employer also increased.  Employers had to continue to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they were furloughed.  At this point, however, employers had to pay Class 1 employer National Insurance contributions (NIC) and pension contributions.

From 1 September 2020, the government grant towards the employee wages reduced to 70%, meaning employers were required to contribute at least a 10% ‘top up’ to wages, together with NIC and pension contributions.

From 1 October 2020, the government grant reduced again to 60%.  This means that employers accessing the CJRS must now contribute at least 20% towards furloughed employees’ wages, in addition to NIC and pension contributions.

30 November 2020 is the last day you can submit claims for periods ending on or before 31 October 2020.  After these date employers will not be able to submit any further claims under the CJRS or add to existing claims, regarding furloughed employees.

Redundancy

It may be that in some instances none of the support measures can assist your business and, instead, you will require to make redundancies.  If that is the case, please contact the team at MLP, who can not only guide you through the correct legal procedure but can also assist with the related documentation, such as letters to employees warning them that they are now ‘at risk’ of redundancy.

Please don’t hesitate to contact the MLP Employment team for detailed advice on any of the issues raised. You can reach us at employment@mlplaw.co.uk or @HRHeroUK or on 0161 926 9969.