Company Meetings in Lockdown: Shareholder Meetings
The government lockdown in response to Covid-19 has caused various logistical issues for everyone including companies. Many activities that a company would normally just “get on and do” as part of its usual routine are having to be adjusted. This includes the various corporate meetings, whether that is a board meeting or a meeting of the company’s shareholders, and during times when matters are so uncertain these meetings are more important than ever.
There is a fair amount of guidance available for listed companies provided by various governing bodies and governance institutions but what about those companies which are not listed?
There are several things the directors should do before calling a general meeting at this current time, the first and most important being, is it necessary? A public limited company must hold an AGM within six months of the end of the relevant financial year but there is no such general obligation on a private limited company unless there is a requirement within its articles of association or shareholders agreement.
If the company is (1) a private limited company rather than a public limited company; and (2) there is no requirement for an actual shareholder meeting to be held within it’s articles of association or shareholder’s agreement; and (3) the business to be considered cannot wait until a physical meeting is possible, then any shareholder decisions could be made by way of written resolution as long as the written resolution requirements set out within the Companies Act 2006 are followed.
If however the company is a public company or has specific shareholder meeting requirements set out within its articles that include time frames the company will need to ensure it complies with the requirements as to notice etc. The articles should be reviewed to see whether there are provisions to delay, postpone or adjourn the meeting and if so whether any delayed, postponed or adjourned meeting will take place within the requisite timeframe and at a time when the current government restrictions on public meetings are not as severe. If the general meeting must go ahead the articles should be reviewed to see what options are available.
It may be possible to hold the meeting in person with a minimum number of shareholders in attendance that would meet the government guidelines. This can be done by inviting the shareholders but asking them not to physically attend (other than those shareholders required to attend in order to form quorum) and vote by proxy rather than in person.
Do the company’s articles allow for a meeting to take place by electronic means with those shareholders who want, and are permitted to, attend in person? A hybrid meeting is where a very limited number of shareholders would meet in person and the others would have the ability to join virtually. This would mean that the company would need to put in place the means to facilitate the electronic meeting participation and communicate the meeting details to its shareholders in order that they can participate – it should be noted that there must be a physical place that the meeting is taking place.
It is also possible, assuming there is an ability within the company’s articles and they do not contain a direct or indirect restriction (including a requirement that the notice specifies a place of the meeting), that the meeting be held virtually.
The overall summary for both director and shareholder meetings is to ensure that you follow the company’s articles of association and any shareholder agreement that might be in place. Ensure that any meetings that do take place comply with the normal regulations as to notice, quorum, declarations etc, and consider whether any amendments to the company’s articles are required to ensure that they have the ability to continue to conduct business in the future should comparable events occur. If you would like further information on company board meetings during the lockdown please see our article found here.
How can we help?
We advise companies on their statutory obligations and all other company and commercial law issues. For robust and strategic advice on your legal duties of directors contact the expert corporate governance team at Herrington Carmichael as early as possible.
Please contact Michelle Lamberth on 0118 977 4045.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
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