Many public listed companies are preparing to host annual general meetings (AGM), where they will present their reports and accounts to the company shareholders and where directors answer queries on the company’s business; the AGM Season is considered an important time to assess the performance of a company. The structure and procedure of AGMs is often dictated by company law.
At the time of writing this article, the UK Government has imposed restrictions on gatherings of large groups as a means to combat the spread of COVID-19. Therefore, many companies will need to ensure they are able to host AGMs in a manner that is legally compliant and safe for all participants.
Companies may consider delaying their AGM. This is possible under the Companies Act 2006, however, companies that choose to pursue this option will need to consider the end-date of their financial year. Under the Companies Act 2006, a public company must hold an AGM within the six-month period before the end of its financial year. Furthermore, companies need to also consider the expiry of any existing shareholder authorities.
In the event notice has already been served on the shareholders to call forth an AGM, if the company’s articles of association permit, it may be possible to postpone the AGM. Where a company’s articles of association are silent, an adjournment of an AGM may still be possible if there is sufficient quorum (i.e. a minimum number of shareholders attending the AGM to make the proceedings of such a meeting valid) and a motion to adjourn is passed.
Alternatively, companies may also consider hosting their AGMs virtually. This option will be subject to a company’s articles of association and practical guidance often recommends a physical meeting of shareholders at an AGM is best for the governance of a company. However, in light the current situation surrounding COVID-19, arrangements to provide virtual attendance of shareholders at AGMs may be the most practical solution going forward, whether AGMs are wholly virtual or hybrid meetings to note the attendance of shareholders who may not be physically present at an AGM, yet are able to attend by electronic means.
Shareholders should also be made aware of their ability to nominate proxies. These proxies can attend an AGM to ensure their votes are counted towards any decision making.
For advice on corporate governance, please contact Claudine Lawrence, Partner and head of our Corporate and Commercial Department on 0203 827 6117 or firstname.lastname@example.org.