ICSA: The Chartered Governance Institute has published new guidance about company AGMs and the impact of Covid-19, which reflects the continuing impact of the coronavirus pandemic on companies’ ability to hold physical general meetings
Prepared in association with the City of London Law Society company law committee and Martin Moore QC, with the support of the Department for Business (BEIS) and the Financial Reporting Council (FRC), the guidance offers advice on how listed companies might hold meetings during the 2021 AGM season.
Peter Swabey, policy and research director at the Institute said: ‘These remain uncertain times for business and, based on the Prime Minister’s statement on 22 February, it appears likely that general meetings will be required to be held on a closed basis until at least 17 May and possibly until at least 21 June.
‘While the pandemic continues to have a destabilising impact on companies’ ability to plan, companies require the flexibility to hold AGMs and other general meetings in a safe and proportionate way.
‘Our long-term policy objective is to persuade the government to introduce legislation to enable companies to hold general meetings flexibly, but the government has been clear that the opportunity to extend the Corporate Insolvency and Governance Act 2020 (CIGA) beyond March 2021, or introduce something more fundamental, is limited, particularly in the short term. Consequently, we have developed this guidance to help clarify expectations surrounding company meetings scheduled to be held after 30 March 2021.
‘Companies will need to adopt a flexible approach to planning AGMs or other general meetings to be held after 30 March, as the options available will depend on the legislation and guidance in place at the time the meeting notice is despatched and at the time of the meeting itself.
‘The central point to be borne in mind, whatever the conditions that might arise, is the need to ensure that shareholder engagement is as effective as it can be given the circumstances.’
Key considerations outlined in the guidance include:
- without the enabling provisions offered by CIGA, closed meetings will only be possible after 30 March 2021 if legislation and guidelines at the time preclude gatherings of more than a very limited number
- it will be necessary to react to the situation at the time and AGMs and other general meetings will need to reflect any restrictions, such as government health and safety measures that might restrict public gatherings in a particular way. Venue capacities are also likely to be significantly reduced due to social distancing rules and this needs to be factored into planning for the meeting
- if there is no specific legislation in force at the time of the meeting, such as national lockdown restrictions, companies will not be able to preclude shareholder attendance either entirely or by seeking to impose a limit on the number permitted to attend. However, a company can strongly recommend that shareholders do not attend due to the unpredictable circumstances
- companies can legally organise hybrid meetings even if their articles do not expressly enable this, provided there is nothing in the articles which prevents their doing so.
Peter Swabey, policy and research director at The Chartered Governance Institute advised: ‘Due to the aforementioned uncertainties, in all instances companies should consider offering shareholders as much electronic engagement as possible, before and after the meeting, as well as during the meeting either as a virtual hybrid participant or an observer. This will give shareholders confidence that they can engage with the business of the meeting without physically attending.’
Maureen Beresford, head of corporate governance, Financial Reporting Council said: ‘The FRC welcomes this further guidance. We encourage companies to use as many channels as possible to allow their shareholders to participate before and during the AGM – making full use of the flexibilities available in their Articles of Association.’