Managing AGMs during the Coronavirus period
Companies planning their annual general meetings (AGMs) should be checking their articles of association (articles), and considering contingency plans in light of the current government guidance relating to Coronavirus.
Every UK public company is required to hold an AGM each year, within six months of its accounting reference date. A private company whose shares are traded on a regulated market is required to hold its AGM within nine months of its accounting reference date. Detailed additional considerations would apply to companies whose shares are traded on a regulated market, and which are outside the scope of this note).
The Companies Act 2006 does not require private companies whose shares are not traded on a regulated market to hold an AGM. Therefore, an untraded private company will only need to hold an AGM if required to do so by its articles. Where a private company is required by its articles to hold an AGM, a failure to do so could constitute a breach of the articles.
Practical options to consider
We set out below some suggestions for companies whose articles require them to hold an AGM. While there is no clear government guidance on this issue as yet, our view is travelling to attend an AGM is unlikely to fall within the current rules relating to essential travel.
- Adapting the AGM
If an AGM has already been arranged and notices sent to shareholders, we recommend checking the company’s articles to see if it can be cancelled, or re-arranged to be held as a virtual meeting. We await further guidance from the government on this issue.
If it is possible to hold a virtual AGM, consider what IT support might be needed, for example, to establish a dedicated area on the company website; establishing an online Q&A for the AGM; announcing a subsequent shareholder event; live streaming; and measures to enable the directors to be available for questions via video link.
- Delaying or postponing the AGM
This might be possible if notices of the AGM have not yet been sent, but the precise details will vary depending on a company’s articles.
- Adjourning the AGM
A company should consider adjournment if it has issued its AGM notice and has no postponement provisions in its articles. Generally, a quorate meeting will be required for an adjournment, but the articles may permit greater flexibility.
If it is intended that the meeting will be opened with the intention of simply adjourning it, an announcement should be released and the company website updated.
- Conducting a hybrid AGM
If the AGM notice has been issued, a company could change to a hybrid AGM (i.e. a combination of a physical and electronic meeting), if it is permitted under its articles. An announcement should be made and the website updated. Shareholders should be made aware that they can participate fully in the AGM electronically.
- Changing the articles
Where a private, untraded company’s articles contain a requirement to hold an AGM, the company might wish to consider amending the articles to remove that requirement, and it may be possible to do so by a written shareholder resolution.
The UK government’s advice is changing on a daily basis. Companies should be aware of this and alter their plans as necessary when new guidance is issued and if relevant emergency legislation is introduced.