Following the breakout of Covid-19, the Irish government implemented strict rules in relation to social distancing and public gatherings. Under the current rules, people are not permitted to gather with any other person outside of their immediate household. As a result of these measures, companies are facing difficulties in holding annual general meetings (AGMs), extraordinary general meetings (EGMs) and board meetings.
Under Irish law, companies are required to hold their AGMs once a calendar year and no more than 15 months may elapse between one AGM and the following year’s AGM. Prior notice of an AGM must also be given to all members at least 21 ‘clear’ days before the meeting is due to take place.
Companies should also be aware of the requirements set out in their constitution in relation to AGMs. While public health policy is currently of paramount importance, companies must still adhere to the provisions within their constitutions.
As there is no certain timeframe as to how long the social gathering restrictions shall apply for, the Irish Law Society’s Business Law Committee suggests that companies try to adapt how they carry out their AGMs rather than adjourning them, as there is no guarantee as to when the meeting can take place in the future. However, this may not be possible for some companies.
There are severable options available for companies who are looking to comply with the current social gathering restrictions:
Adapt the basis in which the AGM is held
Under the Companies Act 2014 (the “2014 Act”) an AGM may be held in multiple locations through the use of technology once members have a reasonable opportunity to participate. This means that meetings are not required to be held in person and can be held over video call or another technological means which the company deems fit.
Alternatively, a company can conduct a hybrid AGM in person and online simultaneously. This will give the attendees the option to opt for whatever they are more comfortable with. For this to be a legitimate option, however, government restrictions on social gatherings would have to be relaxed first.
Use of Proxies
The 2014 Act allows a member to appoint another person, known as a proxy, to attend an AGM and vote on their behalf. The use of proxies would allow for AGMs to be carried out while ensuring the least amount of people present as possible.
The Chartered Governance Institute recently published an article on the effect of the Covid-19 breakout and actively encouraged shareholders to be involved in AGMs through the use of a proxy.
Dispense with the holding of the AGM
Certain types of companies may be able to dispense with the need to hold a physical AGM in a given year by having all members entitled to attend sign a written resolution that acknowledges receipt of the financial statements and resolves matters that would have been resolved at the AGM.
Companies which can avail of this option include single member companies and private companies limited by shares (LTDs). Design activity companies (DACs); companies limited by guarantee (CLGs); and public limited companies (PLCs) with more than one member may not make use of this option.
Delay convening of AGM
As previously mentioned, companies are required to hold an AGM once a calendar year and no longer than 15 months from the previous AGM. Also, newly incorporated companies must hold an AGM within 18 months of their incorporation. Once a company is still within these requirements, they could simply delay holding their AGM until after the restrictions have been lifted. However, due to the fact that there is no set deadline as to the end of the restrictions, this still leaves some uncertainty for members.
Postpone the AGM
If notice of the AGM has not been sent yet, then the company can postpose the AGM to a later date. The power for directors to postpone must be expressly provided for in the company’s constitutional document.
Adjourn the AGM
Where companies have already notified members of an upcoming AGM, it is still possible to move the meeting to a later date by having it adjourned. While the Law Society has encouraged companies to adapt their method of holding meetings instead of adjourning them, adjournment may be the only option in some cases.
An AGM can only be adjourned after it has been validly commenced, so directors should communicate with company members in advance of the AGM to inform them that it should be immediately adjourned due to the current situation. The adjournment will be subject to the consent of shareholders and provisions found in the company’s constitution.
The adjournment of an AGM can be indefinite, however companies must still follow the requirements in relation to the previously mentioned time limits in between general meetings.
Companies wishing to convene an EGM will face similar issues as were found in relation to AGMs. It may be possible to approve a required resolution by way of a written resolution instead of it being passed at an EGM, however this may not be a viable option for companies with a large number of shareholders. In such circumstances, companies should consider an alternative means of convening the meeting, such as by electronic means.
The Irish Law Society’s Business Law Committee has encouraged companies to convene board meetings using electronic means or by way of unanimous written resolutions for the duration of the Covid-19 restrictions. The Chartered Governance Institute has also laid out a number of alternative methods which may be used:
Directors can generally participate in board meeting through electronic means once it is not conflict with any provisions in the company’s Constitution. They may take part in voting and their participation will satisfy the quorum requirement, if the quorum is not met then the meeting should be adjourned.
If companies are unable to hold a meeting through electronic means then board meetings may be conducted by way of a written resolution. A draft of the resolution should be circulated to all directors and it should be signed off by each of the directors, or potentially only a majority, depending on the conditions set out in the company’s constitution.