The annual general meeting of a company is the opportunity for shareholders, and sometimes invited employees, to hear directly from directors and senior management about the year that has been and their plans for the future of the company.
Sometimes over quickly with the passing of standard business, very occasionally the scene of some debate, it remains a rite of passage for new directors.
It is, by definition, intended to be a meeting of people. But what happens where – as we can now imagine all too well – people are stopped from congregating in anything beyond small numbers?
You might be surprised to learn that this is an area where – at least at first glance – things cannot simply move online.
The ability to hold an annual general meeting or other shareholder meeting in a virtual format has not, previously, been clearly permitted by law. And that meant that when lockdown began, companies which needed to hold an annual general meeting or a shareholder meeting for any other reason were potentially stuck.
Fortunately, in response to the socially-distanced new normal the government provided some respite courtesy of the temporary provisions of the Corporate Insolvency and Governance Act (CIGA), introduced in June.
CIGA permitted shareholder meetings to be held virtually, despite company law or a company's articles of association, by way of enabling provisions due to expire on 30 September. They were after all intended to be temporary. Yet the virus, and the problem, remained.
Given the open-ended nature of the difficulties caused by the pandemic, the government has now extended this flexibility to 30 December 2020. This has been done by way of a very short set of Regulations made on 23 September, simply extending the date as it relates to the flexibilities offered.
In further good news for companies, other interim measures for shareholder meetings have also been left in place until the end of the year.
Shareholders' participation in meetings can be restricted to voting and voting may be limited to one means only, such as appointing the chair of the meeting as proxy.
Shareholders may (perhaps) be reassured that they will continue to have a voice by guidance which recommends that procedures be put in place so that, in the context of a virtual meeting, shareholders can still ask questions and continue to hold directors to account. And remember, this is intended to be temporary.
Such freedom is likely to be of use for many private companies where the formalities of AGMs are not as scrutinised. In the public world, not many companies appear to have taken up the ability to hold a wholly virtual meeting, perhaps over concerns around the availability of suitable technology. Marks & Spencer and Kingfisher are two that have and provide useful examples for others.
For those interested, the International Corporate Governance Network has produced a helpful note on the future of virtual meetings; and CGI:ICSA has a similarly focused note on charity AGMs (note that you will need to register, but no charge is made).
This blog provides a personal view only and is not intended to be, and should not be taken to be, legal advice.