The Government announced on 14 May 2020 an update on its forthcoming legislation which will enable companies to hold Annual General Meetings (AGMs) during the coronavirus pandemic. The measures are contained in the Corporate Insolvency and Governance Bill, and the announcement states that the temporary measures to give companies and other bodies flexibility around AGMs and other meetings will apply retrospectively from 26 March 2020.
The announcement also confirmed that the proposed temporary suspension of wrongful trading liability under the Insolvency Act will continue until 30 June 2020.
The Department for Business, Energy & Industrial Strategy (BEIS) and the Financial Reporting Council (FRC) jointly published on the same day further Q&As to provide additional information on the proposed measures to assist companies to hold shareholder meetings.
The 14 May 2020 Q&A document can be found here
The Q&As supplement those published by the BEIS and FRC on 17 April 2020 covering company filings, AGMs and other general meetings during the pandemic.
The 17 April 2020 Q&A document has been previously reported on in the DMH Stallard coronavirus updates
and can be found here
The latest 14 May 2020 Q&As address the following matters:
- The Government’s intention to introduce the legislation as soon as possible, and confirmation that the measures relating to meetings will be drafted to take effect retrospectively from 26 March 2020.
- The Q&As make the point that it is up to companies to make their own judgements with their advisers when deciding whether to hold an AGM in accordance with the draft legislation, for example virtually. While it the Government’s expectation that the legislation will pass into law and apply retrospectively, it cannot guarantee this outcome.
- If an AGM needs to be held by a certain date and the legislation has not passed by the notice period date, the company should still call the meeting, even if it is likely to be delayed once legally possible. Shareholders should be kept informed of such plans.
- The proposed legislation is anticipated to enable companies to override temporarily certain requirements in their constitutions relating to the mode of meeting, for example, a requirement to hold a physical meeting, with flexibilities also applying to general or other meetings of members.
- Under the proposed legislation, companies will have until the end of September 2020 to hold their AGMs, subject to further extension by the Government, with companies required to hold AGMs under their constitutions being given the same grace period as under the legislation.
- Directors should explore all options to provide members with the best level and quality of engagement they can reasonably expect, including the use of virtual meetings and designing user-friendly processes and timelines. BEIS and FRC intend to publish guidance on best practice in this regard.
- Companies will need to consider the specific requirements of their articles of association, and the resolutions passed at previous AGMs, to determine whether the authorisations obtained at last year’s AGM will still be valid if the AGM is postponed.
If you require legal advice on any of these issues, you should get in touch with your usual contact in the DMH Stallard LLP corporate team, or Nick Williams at firstname.lastname@example.org.