Many listed companies are currently busy preparing for their AGMs, as December year-end issuers must hold their meetings before July 2020. Despite a move towards electronic meetings, typically the AGM is still an important opportunity for shareholders to come together in one physical location and hear directly from the company’s directors.
The Covid-19 outbreak will pose a number of challenges if people are generally advised to avoid large gatherings and normal corporate business is disrupted because of sickness or travel restrictions.
Issuers should consider how they will deal with these in their plans for calling and holding all types of general meetings and, in particular, this year’s AGMs. Key questions to consider are as follows:
When does the notice of meeting need to be sent out to be valid?
UK-incorporated listed companies must give 21 clear days’ notice for an AGM (14 days for most other types of general meeting). This period does not include the days on which the notice is given or on which the meeting is actually held.
Helpfully, companies can rely on provisions in the Companies Act and in their articles of association which deem the notice to have been received by a certain time (usually 24 or 48 hours after posting). This means that companies are not responsible for making sure that the notice of the meeting is actually received by the shareholders, even if there is postal disruption.
To minimise the risk of any future challenge, companies should, however, keep an eye on the situation and take mitigating action if possible (for example, by posting notices from an area not affected by travel restrictions or using alternative postal services).
In addition, most listed companies should have room in their usual AGM timetable to send out the notice a bit later than planned, and still fulfil their legal obligations, as issuers normally follow best practice recommendations for shareholders to receive meeting documents roughly a month (20 working days) before the AGM.
Can the notice of meeting and other information be sent out in electronic form only if there are significant delays in printing and sending out documents?
The Companies Act 2006 and the FCA’s DTRs allow communication by electronic means, but UK issuers can only take full advantage of these provisions if they have obtained the specific consent of individual shareholders.
It is likely that many companies, particularly those with a large retail shareholder base, still need to send out a number of hard copy letters to let certain shareholders know that information about the meeting is available on the company’s website.
As some shareholders choose to receive all their information in hard copy, they will also need to print and send notices of meeting, circulars and accompanying documents, such as the annual financial statements and reports, to that group of shareholders.
Companies should work with their usual registrars and printers to check on possible disruption to the timetable and logistics for getting the necessary documents printed and sent out on time.
Can the meeting be convened using other forms of communication, such as advertising?
The articles of association of the company may provide for notices of meeting to be given by alternative means where it is impossible or difficult to use postal services. Advertising in commonly used places and systems of communication, such as company premises, newspapers, television and social media may be useful for reaching out to shareholders and other stakeholders.
These means alone will not, however, be enough to satisfy the legal requirements for convening a valid general meeting.
Should the meeting be adjourned or postponed?
Companies will typically have the power to adjourn the AGM to a different place and/or time if necessary. However, the Covid-19 outbreak is likely to have an impact over a number of months and it is important that meetings are still held so that the company can comply with its legal deadlines and has the authorities it needs to carry on its normal business.
As a result, in most cases it is not advisable to adjourn or postpone a general meeting, unless it is impossible to hold it as originally planned.
Any adjournments that need to be made should be restricted to moving the meeting to the next convenient time and place, without undue delay.
Will there be enough people present to validly hold the meeting?
The quorum requirement should be checked, but for a UK company is likely to be relatively low. It should, therefore, be possible to satisfy this and hold a valid meeting, even if the number of attendees is lower than normal because of travel restrictions and shareholders choosing to stay away.
Bearing in mind quarantine restrictions which may apply, companies are advised to check exactly which of their directors, employees and shareholders are definitely able and willing to attend the meeting to be sure that they can fulfil the quorum requirement.
Usually it would be best practice for all directors to attend the AGM, and particularly if they hold key roles such as chairing committees. This is not a legal requirement, however, so companies should take a view at the time of the meeting as to whether it is necessary for all the usual directors and other employees to be asked to attend in person.
Can shareholders take part in the meeting by electronic means rather than attending in person?
Some companies have amended their articles to allow for shareholders to take part in meetings using electronic means, as well as providing a physical place of meeting for those who prefer to attend in person. Such “hybrid” meetings are unusual in practice so far.
A minority of companies may have articles which allow them to hold general meetings that are entirely electronic. These “virtual-only” meetings are even more unusual in UK practice and the standard investor guidance recommends that a physical place of meeting should always be provided.
In any case, a sensible option for all companies, whether or not their articles allow for electronic meetings, is to continue to work towards holding the meeting at the physical place as planned, whilst suggesting to shareholders that they should consider public health advice when deciding whether to turn up on the day.
All shareholders should also be encouraged to exercise their rights to appoint a proxy and to submit questions to the board in advance of the meeting (eg via an online portal or a dedicated email address).
In addition, companies which do not currently do so should consider live-streaming the meeting on the company’s website and/or making a recording available afterwards. In such case, communications should make clear that these facilities are provided for information purposes only and not as a formal part of the meeting.