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AGMs DURING COVID-19

Coronavirus and social distancing restrictions are impacting the manner in which companies are hosting their AGMs in this reporting season. Outlined below are some observations and considerations one should take into account ahead of upcoming AGMs.

What are the options available to companies?

  1. Conduct virtual meeting with no physical location
  2. Combine traditional physical meeting (with limited attendance) with electronic participation (Hybrid)
  3. Maintain status quo – suits companies with very low shareholder attendance typically
  4. Postpone to a later date within the prescribed 6-month period

There is no prescriptive approach as each company has a different set of variables to navigate, but as a starting point refer to your articles of association and speak to the General Counsel and ask: do we have provisions for virtual or hybrid format?

If the answer is YES, then you are in a minority of UK listed companies as historically, investors have been less than receptive to the idea of a virtual meeting (although investor sentiment has dramatically changed during this crisis) and this format was very slow to take off in recent years.

Those companies that received shareholder approval and amended their articles are now in a better position with added flexibility.

In reality, however, despite this option being available, many have not held a virtual or hybrid AGM before, so here is what to pay attention to:

Other practical considerations:

If the answer is NO, then you are like the majority of UK listed companies and can consider the following options:

  1. Postpone

One option, if the Notice of AGM hasn’t been issued and your article of association allows, is postponement. Companies can look to delay their AGM to the latter end of the prescribed 6-month period. This is a relatively straightforward process. However, there is obviously uncertainty as to how long social distancing measures will be in place. We have not seen many companies postpone thus far – although this may change. ICSA recommends a provision of 21 days’ notice period to shareholders but the articles of association will govern the process for each company.

  1. Adjourn

If the Notice of AGM has already been sent out and your articles don’t allow you to postpone the meeting, then it is possible for the Chair to open the meeting and then immediately adjourn to a later date, providing there is a quorum. IR should work very closely with the General Counsel to ensure that all provisions under the Articles of Association are taken into account, given the advice issued by the Government on social distancing and large public events / gatherings.

Before this option is adopted, it is worth considering a number of factors, such as whether the new date is within six months of the end of the financial year, impact on dividend related dates (if the company is still planning to pay the dividend), reissuance of the Notice of AGM if it is delayed by more than 14 days, if the time limits granted at a previous resolution will expire before the new date (usually in relation to share buy-backs, pre-emption rights etc.)

  1. Go ahead (with a few adjustments)

No one knows how long the lockdown will last and it is important that meetings are still held to ensure that companies have authorities in place to operate and meet relevant legal deadlines. To this end, the majority of the legal advice we have seen is not to postpone or adjourn meetings, but to maintain the status quo with a few adjustments, such as:

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