On 17 April the Department for Business, Energy and Industrial Strategy (BEIS) and the Financial Reporting Council published a Q&A on measures in respect of company filings, AGMs and other general meetings during COVID-19.
We know from an earlier announcement that legislation will be introduced to support companies which, because of COVID-19, may struggle to meet their statutory obligations to hold meetings and file necessary documents at Companies House.
The Q&A provides further information to help companies plan over the next few weeks and months and provides an indication of what the legislation is likely to include.
What are the key messages in the Q&A?
Companies are likely to be able to hold closed AGMs and other general meetings
The Q&A confirms that the legislation is likely to provide companies with the ability to hold closed meetings with the minimum number of people to hold a quorate meeting by way of telephone or other equivalent means. In some cases, for a short period companies will be able to override their articles to allow them to do so.
The legislation is not going to mandate that companies hold virtual meetings with the ability of shareholders to participate because virtual meetings are not frequently used in the UK and it is thought that mandating their use is likely to cause significant issues for companies at this time.
Shareholders will have the ability to vote by proxy at the closed meetings. In terms of addressing concerns that shareholders will lose the opportunity to engage with the company and its board, the Q&A states that companies will be expected to engage with stakeholders before, during and after meetings, including responding to shareholder questions. Companies may want to record any relevant responses in the AGM minutes.
The Q&A also suggests that companies should consider holding shareholder days later in the year, which will offer shareholders access to the board and company in a similar way to an AGM.
Companies are likely to be able to restrict communication of meeting documentation to solely electronic means
In terms of communicating with shareholders, the legislation is likely to temporarily give companies the flexibility to restrict communication of notices and other meeting documentation to solely emails, websites or other electronic means. This is to address concerns that a shareholder may request a hard copy of an AGM notice, for example, when companies have limited or no staff based in their offices to deal with such requests.
Companies will have the option of extending the deadline within which their AGM must be held
In addressing the question of whether it would be easier to simply extend the deadline within which AGMs must be held, the Q&A confirms that it is anticipated that there will be an option of an extension available. However, it is expected that most companies will want to hold meetings in their usual timeframes to allow for decisions to be taken at AGMs.
Guidance for companies if their AGMs are to be held imminently
While we expect the new legislation to be published shortly, for companies that will hold their AGMs imminently there is guidance on the Chartered Governance Institute website, which provides advice on how processes might be managed within the existing framework (https://www.icsa.org.uk/knowledge/resources/agms-and-impact-of-covid-19).
Further measures may be introduced in relation to Companies House filing requirements
Finally, the Q&A confirms that BEIS is monitoring the ability of companies to meet deadlines to submit documents to Companies House and confirms that action will be taken to provide extensions if this is necessary.
We will of course issue an update once the legislation is available.