Rules for holding an AGM (or other general meeting) safely during the COVID-19 pandemic
AGMs and other general meetings are very important for businesses. However, as with many other procedural activities, the COVID-19 pandemic poses a challenge. In this article, we explore the rules for holding AGM meetings and other general meetings safely during the pandemic.
A temporary solution: what are the current rules for holding AGMs?
The Government provided a temporary flexibility of the rules around AGMs and other general meetings to enable compliance with COVID-19 restrictions. These provisions though are currently due to end on 30 March 2021.
The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 (2020/1349) (CIGA), says that AGMs and other general meetings:
· Need not be held at any particular place.
· May be held, and any votes may be permitted to be cast, by electronic means or any other means.
· May be held without any number of those participating in the meeting being together at the same place.
Therefore, although the articles of association and other rules and legislation, which usually govern the procedure for AGMs (and other general meetings) are effective, they will be subject to CIGA.
So, up until 30 March 2021, companies can hold virtual or hybrid (i.e. some members attending in person, to meet quorum requirements, and some attending virtually) meetings, instead of having to hold a fully physical meeting.
But, what happens after 30 March 2021? Are companies still able to hold electronic / hybrid general meetings?
The restrictions on travel and gatherings imposed by the Government at the time of any proposed general meeting will of course dictate the nature of the physical part of a hybrid meeting. For example, venue capacities are likely to be reduced to enable social distancing rules to be followed.
Although nothing in the Companies Act 2006 currently appears to stop electronic meetings, the following practical measures should also be carefully considered to determine whether any form of electronic meeting can be held:
- Do the articles of association of the company prohibit electronic/virtual or hybrid meetings? The articles of association should be reviewed in the first instance.
- Does the company have suitable technology to facilitate a hybrid meeting? It is important to allow shareholders/members who are not personally present at a physical meeting to attend, speak and vote at the meeting electronically so that they are treated fairly and equally across the physical and electronic platforms.
ISCA Guidance, published on 24 February 2021 which sets out further guidance in this area, states that if the above cannot be achieved, then a hybrid meeting should not be carried out instead of a physical meeting, as it may question the validity of the meeting.
As a result of the uncertainty detailed above, it may be sensible, moving forwards, for companies to consider amending their articles of association to expressly allow them to hold remote general meetings to get over the practical hurdle of having to hold a physical meeting, at least in some form.