AGM during global pandemic - Arrange or Postpone?
Due to the COVID-19 pandemic many companies have cancelled or postponed their meetings. One of the most important meetings for each company is its annual general meeting (AGM), at which shareholders gather with a company's board of directors to discuss the company's results, report on the year's events and hold elections. Under Gibraltar Law, it is an obligation to hold an AGM even for a private company, unless this requirement is formally dispensed with.
It is generally believed that virtual AGMs undermine the opportunity for interactions between shareholders and directors; therefore personal attendance has been required by law in many jurisdictions. Nevertheless, in the current uncertain circumstances alternative methods of holding meetings have been considered.As Albert Einstein would have said: “For all crises brings progress. Creativity is born from anguish, just like day is born from the dark night.”
On 26 June 2020, the UK Government enacted the Corporate Insolvency and Governance Act 2020 (CIGA), which makes temporary changes to laws relating to the governance and regulation of companies.
CIGA has introduced:
- a number of measures to English restructuring and insolvency law to maximise the chance of survival of companies facing financial difficulties. This includes:
- supporting directors to continue trading through the emergency without the threat of personal liability for wrongful trading; and
- protecting companies from creditor action.
- flexibility to companies in respect of:
- their AGMs which would be required to be held between 26 March 2020 and 30 September 2020(e.g. CIGA allows virtual AGMs with an option to vote electronically); and
- company filings (e.g. CIGA allows extension for the period in which public companies must file their financial statements).
In addition, on 10 July 2020 The Chartered Governance Institute (CGI) and the Financial Reporting Council (FRC) have issued best practice recommendations, which also recommends holding virtual meetings if physical meetings are not possible.
There is no definite time-frame for a return to business as usual and the government is regularly reviewing the need for the existing coronavirus restrictions. As a result, companies should continue to consider their individual circumstances and contingency plans in light of the spread of Covid-19. It is likely that once this crisis passes, companies will move back to in-person AGM arrangements, whilst maintaining the virtual option as part of a hybrid AGM. Whichever method is chosen, a clear communication with shareholders before, during and after the meeting is required to ensure that shareholders continue to have the opportunity to engage with their directors.
The COVID-19 crisis has brought many challenges to corporate governance (CG) practices, however new ideas to comply with CG standards have emerged during this difficult time. Our experienced company management team can assist you with arrangements for your AGM. You can contact us at firstname.lastname@example.org or call us on +350 200 68 450.