31 March, 2020
The AGM season is well under way for many businesses, but recent restrictions on group gatherings, and the UK 'lockdown' as a result of COVID-19 is posing difficulties for meetings to be held as planned.
Businesses may find themselves in a position where holding an AGM is no longer possible due to travel restrictions, cancellations or closures of locations and the illness of members. This poses concerns for the majority of companies who have December 31 year-ends.
The flexibility surrounding a company's AGM will ultimately depend on their Articles of Association, including the ability to postpone an AGM where necessary. In the event that a postponement is not possible, the AGM must go ahead in accordance with the notice. Contingent on the Articles, the meeting may be subsequently adjourned if there are not enough members to satisfy the quorum, or (if the quorum is satisfied) with consent of the other members.
Many companies may find that they are able to hold hybrid AGMs whereby members can participate electronically, in conjunction with a physical meeting. Aside from the COVID-19 2020 AGM issue, if a company's articles do not permit hybrid AGMs, they may wish to consider amending these in future to provide future flexibility.
Members could be encouraged to partake in AGMs via proxy voting; that is, you can get someone to vote for you, and tell them what to vote for. This will ensure that members can remain to vote on important business decisions. Proxy voting may, subject to a company's articles, also take place electronically and online.
If an AGM can be held successfully, members are encouraged to submit their questions to the Chair prior to AGM. This is likely to uphold structure and facilitate meetings accessed remotely. Notices should include clear details as to how the members can participate and vote whilst also including a helpline in the event that technology falls short. Companies may also wish to incorporate prior briefings for key members. Companies should also have regard to the quorum required to run a meeting, and Chairpersons may wish to reduce the number of members present and the duration of a meeting to accommodate effective electronic communications. This may be particularly prominent in businesses where their number of members is significant.
Nevertheless depending on options available and whether they are able to comply with government requirements, companies may still continue to opt with the status quo by holding the AGM as planned. This may be possible for example, in family run businesses where all members live within the same household.
Companies who are scheduled to hold an AGM over the coming months are advised to keep abreast the changes in Government guidelines. Of course, whether such changes can be facilitated is contingent on the ability to engage with IT and technology providers, all of which is likely to come at an additional cost. Members should also have regard to the additional risks associated with technology and reputational issues, in the event that a meeting is accidentally livestreamed or recorded.
Further information should be effectively communicated to shareholders to keep them up to date via the company's website.