Company secretaries servicing organisations in both the private and voluntary sector will have breathed a collective sigh of relief that the Corporate Insolvency and Governance Bill (the Bill) is making rapid progress through the chambers of Parliament.
Much of the Bill is concerned with introducing measures which will enable companies and their directors to continue to trade during these challenging times. This article concerns the provisions in the Bill which temporarily provide greater flexibility regarding the holding of annual and extraordinary general meetings.
We expect that it will become law at some point later this month. When the Bill becomes law, companies and community benefit societies will be able to hold a general meeting which, notwithstanding anything to the contrary in its rules or articles:-
- allows the general meeting to be held virtually and in multiple locations;
- allows voting to be undertaken using electronic facilities (i.e. video conferencing) or any other means;
- does not require a minimum number of persons being present in one location for the general meeting to be quorate; and
- does not require a member to have a right to attend in person, to participate in the meeting (other than a right to vote).
The Bill provides that this flexibility will apply to any AGM or extraordinary general meeting held between 26 March 2020 and 30 September 2020 (or such longer period as the Secretary of State or the relevant devolved administration may determine (but not extending beyond 5th April 2021)).
So what practical steps should company secretaries now take?
We recommend that:
- the board of management consider the flexibilities afforded by the Bill and agree on the procedures that are most appropriate to their organisation – this will need to take account of the facilities available to support virtual participation (particularly any limits on the number that can access those facilities);
- consideration is given to how the flexibilities in the Bill interface with your quorum provisions – for example, what would be the position if all members plan to access the meeting remotely and the facilities fail for some or all members?; and
- given that these flexibilities will only apply for a short period, consideration should be given to the question of whether the organisation’s rules or articles should be revised to allow for virtual meetings . Company secretaries will have noted the result of the vote at the recent AGM of Aberdeen Standard Life. At that meeting, 37% of shareholders rejected the proposal that participation must be through remote access only. Shareholders seemed to be worried about being excluded and some shareholders wanted to see the board in person rather than on a Zoom call. Boards will no doubt wish to have regard to those concerns when recommending to members any changes to the procedures for general meetings that apply post COVID.
One option worth considering is to allow for “hybrid” general meetings. This approach not only provides a failsafe procedure (where remote access facilities fail) but may also provide greater scope for participation in the longer term.
This approach would allow for the board to agree the arrangements that are to apply for each general meeting, including scope for shareholders to participate either in person or through remote access.
A number of RPs and RSLs are now looking to build this flexibility in to their constitutions so that these arrangements can continue to apply after the flexibilities provided for in the Bill cease to be available.
If you would like advice on how to navigate the provisions in the Bill and /or advice on the options for amending your constitution to reflect the provisions of the Bill on a permanent basis please contact Jonathan Jarvis, Andrew Crawford, Diarmaid O’Sullivan or Nadine Ofori-Atta.