The Chartered Governance Institute has published guidance for companies due to hold their Annual General Meetings (AGMs). Whilst the guidance is aimed at large and listed companies, there are, within the guidance, elements that could assist small and medium sized companies in planning their AGMs.
1931 Act Companies
A company that has filed a members written resolution dispensing with the requirement to hold an AGM under the Companies Act 1931 (Dispensation for Private Companies) Annual General Meeting Regulations 2010 does not need to hold an AGM. Depending when the company’s AGM is due and subject to meeting the criteria in the Regulations, it may still be possible for a company to file a members’ written resolution dispensing with AGMs. If, however, time does not allow or the number of members makes this difficult to arrange, then the company will need to hold its AGM.
Under the Companies Act 1931 (the Act), a company is required to hold an AGM within 15 months of the date of the last AGM. The restrictions on movement and gatherings introduced to combat COVID-19, which include that public gatherings of more than two people are not permitted (the Stay at Home Measures) might make it impracticable to call a meeting of the company. Under section 114(2) of the Act , a company due to hold its AGM may be able to postpone or delay sending out its notice convening the AGM if for any reason it is impracticable to call a meeting of the company or to conduct a meeting in accordance with the company’s articles or the Act. Subject to reviewing the company’s articles, this may be an option open to a company, especially if the company only has a small number of shareholders and they agree to such a delay. You should, however, be aware that the requirement to hold a meeting at least every fifteen months would remain and, at least technically, the company and its directors would be liable to be fined if it was not complied with. Further, in the event of a delay, a shareholder entitled to vote at a meeting, or the court, can seek an order to hold a meeting.
If it is not possible to delay or postpone the company’s AGM and the Stay at Home Measures mean members will not permitted to attend the AGM, other options are available. For example, subject to quorum requirements, a company could hold the meeting with just two shareholders present, either at the registered office of the company (subject to social distancing restrictions) or, if the company is a small family company, at the home of the shareholders provided they are in the same household. Alternatively, it may be possible to hold the meeting using a telephone or video conferencing service.
The Act does not make provision for holding meetings using electronic means, however, the company’s articles should be carefully checked as they may permit a shareholders meeting to be held electronically.
The notice convening the AGM should make it clear that the members are not allowed to attend in person and they should use the proxy form to cast their votes and appoint the chairman of the meeting as their proxy. So that members feel engaged the notice might also contain information about voting and how any questions may be put to the directors prior to the date of the AGM.
By members using the proxy forms, it may be possible for the AGM to proceed with the absolute minimum number of members present, subject to the social distancing requirements being observed. Under the Act, and subject to anything contrary in the company’s articles, the quorum for a general meeting is two members, one of whom should be the chairman of the meeting as stated in the notice. If the company’s articles require a quorum of more than two members for the meeting, the proxies appointing the chairman of the meeting would provide the additional numbers for the meeting to be quorate and proceed to business. If a member has already submitted a proxy appointing someone other than the chairman of the meeting as their proxy, they should be asked to re-submit the proxy appointing the chairman of the meeting as their proxy.
If a company’s articles allow meetings to be held using audio visual or telephone conferencing services, in order to hold the AGM it is important to ensure that all those participating in the AGM are able to fully engage with the meeting and that they can hear and speak to the other participants in the meeting. If the members cannot fully engage with the meeting, or there is a breakdown in the telephone or audio visual system, there is a risk that the meeting will be invalid, which means that the meeting took place but could not validly conduct business.
2006 Act Companies
Those companies incorporated under the Companies Act 2006 (2006 Act) and using the Model Articles of Association are not required to hold an AGM, unless the model articles have been amended to incorporate provisions to hold AGMs the company’s articles should therefore be carefully checked.
Unlike the Act, the 2006 Act makes provision for meetings to be conducted using telephone or other electronic means of communication provided all members so participating can hear and communicate with each other. Subject to such facilities being available for a meeting to proceed
If you would like to know more about any of the issues raised above, don’t hesitate to contact us.
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