Traditional AGM season is fast approaching - with many listed companies having December 31 year ends preparing to send AGM notices to shareholders over the coming week and months. With this in mind, how will AGMs proceed in light of current restrictions on movement and gatherings introduced by the Government to battle COVID-19?
Please note: the information contained in our legal updates are correct as of the original date of publication
Traditional AGM season is fast approaching - with many listed companies having December 31 year ends preparing to send AGM notices to shareholders over the coming week and months (if they haven’t done so already). With this in mind, how will AGMs proceed in light of current restrictions on movement and gatherings introduced by the Government to battle COVID-19?
On 28 March 2020, the Government issued a press release confirming measures aimed at supporting business, which included the introduction of legislation to enable companies to hold AGMs in a way which is consistent with the ban on public gatherings of more than two people and the compulsory stay at home measures.
The Chartered Governance Institute continues to publish and update its guidance on how listed companies can still hold a valid general meeting during the current lockdown. The latest guidance includes the following best practice advice:
Adopting an approach consistent with this guidance seems the simplest solution to allow compliant meetings to take place. An alternative, if permitted by a company’s articles of association, might be to hold an AGM exclusively online – although it should be noted that in normal circumstances these have not previously been endorsed by various investment/shareholder representative bodies. Practical and logistical challenges may lessen the adoption of virtual AGMs for the 2020 season - particularly choosing the right technology/communication forum, establishing rules and practices for virtual meetings and ensuring everyone has access by providing clear joining instructions. If not done before, holding a virtual AGM would mean adapting AGM documentation, incurring additional cost and taking up greater management time.
In addition to measures applying to the holding of AGMs, it is also worth noting that the FCA is allowing listed companies and regulated markets six months instead of four to publish annual financial information and AIM Regulations are allowing AIM companies nine months instead of six, provided the company seeks the 3-month extension from Companies House (see our update on this here).
Companies planning to hold their AGM in the coming weeks and months will need to stay up to date with changes in legislation and guidance - both of which can change quickly. Moving forwards, more companies are likely to consider making changes to their constitutional documents to permit virtual or hybrid meetings as a means of dealing with some of the practical issues currently arising from the need to hold a purely physical AGM, although such changes are unlikely to be of assistance for the 2020 AGM season.
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