Stephen Hamilton of Mills & Reeve writes:
Some companies are considering whether they can hold the AGM using virtual means of communication. This would involve the use of video and audio conference technology to hold the AGM without the need for any of the shareholders to be physically present at the same location. This can be a very tricky logistical operation but may provide a solution. However, it is imperative to ensure that the company’s articles provide that an AGM can be conducted in this way and that, if used, the stringent requirements relating to hybrid AGMs are observed.
An easier alternative to implement may be to have a minimum number (dependent on the articles) of shareholders present at the specified location for quorum and voting purposes. Other shareholders could then conference call in to the meeting and, whilst they may not be present for quorum or voting, the chairman could allow them to effectively participate in discussions. Care should be taken to ensure that shareholders are sufficiently informed of this process prior to the meeting and that the meeting is conducted in compliance with the articles.
Market practice is developing almost daily in relation to AGMs. The recent guidance issued by ICSA, The Chartered Governance Institute, reflects the current leading guidance in this area. The ICSA guidance suggests prohibiting external shareholder attendance at the AGM and simply ensuring the minimum number of attendees required (who follow social distancing rules) so as to ensure a quorate meeting can be held. Such meeting would merely address the formal business and would then close. ICSA suggests that attendance at such meeting for the minimum number of individuals required would constitute “essential work” that could not be undertaken from home.
The Government has also issued a press release on Saturday 28 March saying that it would be introducing legislation shortly regarding the holding of AGMs in compliance with lockdown restrictions and temporarily permitting online AGMs or postponing such meetings.
For more information see our coronavirus hub or contact Stephen Hamilton.