The Corporate Insolvency and Governance Act 2020 has introduced sweeping changes to the corporate landscape, including a range of short term measures to assist companies during the Covid-19 pandemic. The two key takeaways for shareholders of solvent companies are:
- Companies have greater flexibility for holdings meetings between 26 March 2020 and 30 September 2020, including the ability to hold virtual meeting regardless of what their articles state;
- If a company is/was due to hold an AGM between 26 March 2020 and 30 September 2020, it can delay its AGM so long as it is held before 30 September 2020.
What are the measures?
Between 26 March 2020 and 30 September 2020, the majority of companies (whether public or private) will be able to change the way they hold an AGM, a meeting of any class of members or a meeting of delegates appointed by members.
These changes are that:
- A meeting does not need to be held at any particular place;
- A meeting may be held electronically and votes can be cast by electronic means;
- A meeting may be held without quorum being present in the same physical space:
- Members do not have a right to:
- Attend a meeting in person;
- Participate in the meeting other than by voting;
- To vote by particular means (but do have the right to vote by some means).
Further, if a company is/was due to hold an AGM between 26 March 2020 and 30 September 2020, it can delay its AGM so long as it is held before 30 September 2020.
It is worth noting these changes override the requirements set out in a company's articles and apply retrospectively (e.g. if a Company held an AGM virtually on 2 April 2020 before the new act came into force on 26 June 2020 they would still benefit from these new provisions). The government also have the power to extend these changes beyond 30 September 2020 if required.
What does this mean for me as a shareholder?
As AGMs are often the forum for shareholders to check in on the financial health of a company and interact with its directors, they may be understandably worried that these changes temporarily remove their right to attend the meetings. This is especially true given the economic climate created by the Covid-19 pandemic.
However, the government have made clear that the changes are not a carte blanche for companies to suspend all engagement with directors. They have stated:
- Shareholders should be engaged with before, during and after the AGM. They suggest shareholders should be able to submit questions by electronic means before the AGM, which are then considered during the AGM and reflected in the AGM minutes;
- Shareholders should be able to hold directors to account and they have suggested the potential for 'shareholder days' later in the year in lieu of traditional AGMs. This would offer shareholders access to the directors and give them a voice.
This should quell shareholders ' fears and ensure directors are held to account. If you have any queries on shareholder issues, contact Jamie Rhodes at jamie.rhodes@howardkennedy.com.
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