Covid-19 sees companies develop AGM contingency plans
18 Mar 2020
Guidance on how to arrange and conduct AGMs during the current coronavirus epidemic has been published by ICSA (The Chartered Governance Institute) in conjunction with the Financial Reporting Council (FRC) and law firm Slaughter & May
18 Mar 2020
The guidance, which has been reviewed by the Department for Business, Energy and Industrial Strategy, suggests that companies consider their contingency plans in light of the spread of covid-19.
Paul George, FRC executive director of corporate governance and reporting said: ‘As the AGM season rapidly approaches, companies need to manage the risks presented by the spread of coronavirus transparently whilst ensuring shareholders continue to have the maximum opportunity to have their say.
‘The guidance offers practical support for companies on holding AGMs and they should familiarise themselves with it now to manage any risks whilst meeting their reporting responsibilities.’
The options laid out by the guidance, which reflects UK law and regulation, are to:
- adapt the basis on which you hold the AGM;
- delay convening the AGM, if notice has not yet been issued;
- postpone the AGM, if permitted under the articles of association;
- adjourn the AGM; and
- conduct a hybrid AGM, if permitted under the articles.
The Chartered Governance Institute noted that given that the situation continues to evolve, companies may ultimately have to use more than one of these options.
Peter Swabey, The Chartered Governance Institute policy and research director, said: ‘It is important that companies balance the need for pragmatism in the light of the covid-19 outbreak against their legal and regulatory obligations and good practice.
‘In my view, as a general rule, they cannot go very far wrong if they try to maximise the opportunity for shareholders to take part in the meeting.
‘Encouraging proxy voting, the establishment of an online shareholder Q&A for the AGM and live streaming the AGM are all sensible measures to consider and companies may also choose to offer an opportunity for retail shareholders to engage with the board later in the year.
‘Companies should also remember that it may become necessary to postpone or adjourn the meeting if the situation changes.
‘A dedicated area on the company website should be established to provide shareholders with the most up-to-date information.’