Guidance on holding Annual General Meetings
Pursuant to the Companies Act, quoted companies must hold an Annual General Meeting (AGM) within 6 months of the financial year end and no longer than 15 months after the previous years AGM. Directors may face penalties in the form of fines if they do not comply.
The ‘Stay at Home’ laws enacted to protect the public from the spread of COVID-19, may make complying with legal requirements challenging for quoted companies.
Broadly the following options are open to companies:
- Adapt the basis on which you hold the AGM.
- Delay convening the AGM, if notice has not yet been issued.
- Postpone the AGM, if permitted under the articles of association (Articles).
- Adjourn the AGM.
- Conduct a hybrid AGM, if permitted under the Articles.
When deciding which is the best course of action, companies will need to consider a number of factors including: the potential expiration of authorities taken at the last AGM needed to carry out essential business, any requirements or limitations set out in the company’s Articles of Association, potential expiration of Directors Remuneration Policy, shareholder interests and communication with shareholders, quoracy requirements and proxy voting.
Guidance on AGMs has been produced by The Chartered Governance Institute with the support of a collection of legal firms as well as organisations like the FRC, the Investment Association, and the QCA. The Department for Business, Energy and Industrial Strategy has also reviewed the guidance. The guidance can be found here.
An additional supplement has been produced which offers additional guidance in light of the ‘Stay at home’ Government measures including:
- How to ensure that the meeting is quorate
- Who should chair the meeting
- Which directors will be allowed or expected to attend the general meeting
- Where to hold the meeting in the event of the planned venue being unavailable or otherwise inaccessible, and
- Encouraging shareholders to vote by proxy.
BEIS has announced it will lay legislation to give companies more flexibility when holding an AGM, however it is unclear when this will happen.
The Financial Reporting Lab has produced this infographic on reporting during times of uncertainty. The infographic sets out five current questions investors are seeking information on. View it here
Institutional Shareholder Services Inc – Policy Guidelines following COVID-19
ISS has published some guidance on the application of its policies in light of the COVID-19 pandemic. The guidance can be accessed here
Thomson Reuters Practical law
Thomson Reuters Practical Law have set up a COVID-19 toolkit which can be accessed here. The toolkit assists counsel working across jurisdictions with resources such as practice notes, standard documents, checklists and other related content to support them to deal with challenges associated with COVID-19.
Thomson Reuters Practical Law has also produced a practical note FAQ and video on electronic signatures, digital signatures and e-signing platforms. The practical note FAQ can be accessed here and video here.
A practice note tracking COVID-19 announcements relating to AGMs and disclosures in FTSE 350 and AIM 50 AGM notices has also been created by Thomson Reuters Practical Law and can be accessed here. A further practice note tracking COVID-19 risk factors and disclosures in prospectuses, AIM admission documents, circulars and other public documents from February 2020 onwards has also been created and can be accessed here.
MM&K have written a helpful article for Remuneration Committee Chairs on COVID-19 which can be accessed here. MM&K's senior team are also offering offering free of charge consultations to discuss retaining, focusing and motivating management and staff throughout periods of economic uncertainty. You can register your companies interest here.
Other articles written by MM&K include Why UK listed companies are now considering replacing their LTIPs with Restricted Stock Plans Now cash is the only KPI, there is an opportunity to rethink executive incentives and COVID-19 and its impact on pay in the UK’s Private Equity / Venture Capital Industry.
The Investment Association
The Investment Association has released a statement on executive remuneration in UK listed companies, regarding shareholder expectations during the COVID-19 Pandemic. The statement addresses, dividend payments, performance conditions, long term incentive performance plans and remuneration policies. The statement can be accessed here.
International Corporate Governance Network.
The ICGN has released a statement on the shared governance responsibilities of companies and investors during Covid-19. This can be accessed here. The ICGN has also published a statement on capital allocation, focusing on this issue from a corporate governance and investor stewardship perspective which you can access here.
Praxonomy have written an article providing insights on how to ensure your board can adapt to the 'new normal' following COVID-19. You can read the article here.
KPMG have written an article 'Remuneration Committees- Navigating through the impact of Covid-19'. You can access it here.