Holding an AGM during Covid 19
- Corporate & Commercial Law
- 16th Oct 2020
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 […]
By aleksMLP Law
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?
- You can hold a VIRTUAL MEETING
|Allows everyone to attend virtuallyHeld like a “face to face” meetingCast votes virtually||Can 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:
- the number of people required for the quorum attends in one place (with social distancing in place); and
- 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
|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
|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 firstname.lastname@example.org.
About the expert
Stephen is the Owner of MLP Law and leads our Commercial, IP and Dispute Resolution teams which provide advice on all aspects of the law relating to mergers, acquisitions, financing, re-structuring, complex commercial contracts, standard trading terms, share options, shareholder and partnership agreements, commercial dispute resolution, joint venture and partnering arrangements, IT and Technology law, Intellectual Property, EU and competition law, Brexit and GDPR.
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