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AGMs and impact of Covid-19

11 May 2020 #Commercial #Corporate


With the Covid-19 outbreak placing unprecedented pressure on business, companies are having to rapidly adapt the way they carry out their corporate duties and responsibilities. Last month, in response to queries regarding Annual General Meetings (“AGMS”), the Chartered Governance Institute published two pieces of guidance titled “AGMs and impact of Covid-19” and “AGMs and impact of Covid-19: Supplement”. The latter was necessary after the Government announcement of more stringent “Stay at Home Measures”, passed into law on 26th March 2020.

“At a time of great uncertainty, companies and directors will need to focus on making the critical decisions that will enable them to get through the period with least disruption” states the guidance. Whilst the advice is focused more acutely on suggesting an approach for listed companies to hold a valid general meeting in these unorthodox times, a great many of the suggestions and support will be applicable to businesses of all sizes, whether listed or private.

The advice stresses that it offers suggestions only and, as with any corporate responsibility related decision, a company will need to consider their individual circumstances; regular references are made to the importance of adhering to the company’s own articles of association (the “Articles”).

In short, the guidance covers the following options for a listed company to take when planning their AGMs during the spread of Covid-19:

  • Adapt the basis of which you hold the AGM.
    • Companies may want to consider arranging supplemental venues in addition to the main venue, live stream the AGM, or restrict the number of non-shareholder attendees.
  • Delay the AGM, if notice has not yet been issued.
    • If considering this approach, it is likely the company will have to publish an update announcement, assess the impact this may have on dividend payments, and check the expiration dates on which any standing authorities approved at the previous AGM.
  • Postpone the AGM, if permitted under the articles of association.
    • Similar considerations to those outlined above for ‘Delay the AGM’ will need to be considered here. Where there is no provision for postponing the AGM in the Articles, it is worth noting that there is no statutory minimum notice period for rearranged meeting; 21 clear days’ notice is considered good practice.
  • Adjourn the AGM.
    • The guidance suggests that adjournment should only be considered when the company has issued its AGM notice and does not have postponement directions in its Articles. Where this is the only possibility, the adjourned meeting must be held within six months of the company’s financial year.
  • Conduct a hybrid AGM, if permitted under the Articles.
    • Here, the guidance stresses that virtual-only meetings may not be viable as they are unlikely to constitute valid meetings. It is therefore recommended that a combination of both virtual and physical meetings is pursued as this is less likely to preclude the ability of shareholders to attend in person.

The Guidance recognises that there may be instances where it will be necessary to use more than one of the options above or a combination of the two; the full guidance can be found here.

For more information or business assistance call our Business Response Team on 07776 305 578, and speak to one of our Partners.

 

 

Clarkslegal, specialist Commercial lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Commercial matter please contact Clarkslegal's commercial team by email at contact@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Jacob Montague

Jacob Montague
Trainee Solicitor

E: jmontague@clarkslegal.com
T: 0118 960 4613
M: 0790 9964 585

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