COVID-19: New legislation on AGMs during COVID-19 measures
This article was last updated on 29 May at 14:05.
Amendments to company law
On 20 May the Government proposed the Corporate Insolvency and Governance Bill (the Bill) which is expected to be approved by the Parliament on 3 June. The Bill introduces temporary amendments to insolvency and company law to help businesses navigate and address the challenges imposed by COVID-19.
The bulk of the Bill relates to new insolvency regulations and also includes two corporate governance measures that relate to Annual General Meetings (AGMs) and extension of filing deadlines.
Strict AGM rules relaxed during COVID-19
The Bill is eagerly awaited by governance professionals as it is expected to provide a solution for organisations that are under legal obligation to hold Annual General Meetings (AGMs) but have been unable to do so at a time when social distancing is required under COVID-19 emergency measures as virtual meetings are not permitted under current legislation.
It contains provisions that temporarily permit organisations to hold closed AGMs and to conduct business of the meeting and communicate with members by electronic means (webinars, video calls, conference calls etc.), even if this is not permitted under their constitution. One of the provisions specifically overrides the conflicting provisions that may exist in the current legislation and in each organisation's constitution, including articles of association.
It is envisaged that, under these new measures, shareholders will be exercising their right to vote via proxy forms or by electronic means in advance of the meeting. If your organisation has a very large membership it is recommended to research the options for holding virtual AGM in advance of the meeting. Some webinar platforms enable remote poll voting during the meeting and have capacity for large attendance. We understand that Aventri has been used successfully for over 1,000 attendees.
Once approved, these new measures are expected to apply for a limited period, and retrospectively, to meetings held, or due to be held, between 26 March and 30 September 2020. However, whilst it is anticipated that the Bill will be approved on 3 June, the final text of this legislation will not be known until it is passed and so it cannot be assumed that the time period will be as stated in the proposed Bill. Therefore, any meetings held before 3 June in anticipation of the new legislation coming into effect retrospectively, may be invalid.
Extending the filing deadlines
The Bill also includes provisions that enable filing deadlines to be extended for the following filings:
- Confirmation statements and all event-driven filings (reporting change of directors, PSCs etc.)
- Registration of charges
The Registrar of Companies already permits requests to be made for more time to file the accounts for reasons related to COVID-19 but the new measures further reduce the pressure on businesses that are unable to submit the filing on time during the COVID-19 period.
The full text of the Bill can be found here - Schedule 14 contains the proposed legislation relating to general meetings.
The Financial Reporting Council issued an updated set of Q&As regarding the AGMs here.