BEIS issue Q&A on holding AGMs
BEIS issue questions and answers on practical matters relating to company filings, AGMs and other general meetings during COVID-19
The Department for Business, Energy and Industrial Strategy (BEIS) are urgently developing measures to bring forward legislation to assist those companies for which COVID-19 restrictions make it difficult to meet statutory obligations to hold meetings and to file documentation on the Companies Register.
In the meantime, BEIS have published Q&A designed to provide companies with additional information upon which to plan activities over the coming months, the key points of which are summarised in this article.
BEIS are urgently developing measures to bring forward legislation to assist those companies for which COVID-19 restrictions make it difficult to meet statutory obligations to hold meetings and to file documentation on the Companies Register. A series of Q&As were published on 17 April 2020 to provide companies with additional information upon which to plan activities over the coming months, the key points of which are as follows.
Flexibility on forming quorum
BEIS envisage providing companies with the ability to hold “closed” meetings with a minimum number of people by way of telephone or other equivalent means of communication. Most companies’ Articles allow them to convene a quorate meeting with a small number of people, typically between two and five. The additional flexibility that will be available to companies will allow them temporarily to form that quorum by telephone or by electronic means.
Virtual meetings untested
BEIS highlight that virtual meetings are uncommon and largely untested in the UK. They believe that mandating their use is likely to create further significant issues due to matters such as the limited number of service providers and the sheer number of companies that will need to hold meetings within a short timescale.
Shareholders will have the ability to vote by proxy. BEIS expects companies to engage stakeholders prior to, during and following meetings including responding to shareholders questions sent in by electronic or other means. Any response could also be included in the minutes of the AGM. Companies should consider holding shareholder days later in the year, which will offer shareholders access to the board. Following the AGM companies should also ensure shareholders are kept informed of the decision-making process and issues currently affecting the company as they would normally do. For example, any changes to the business model or risks.
Hard copy documents
Normally, if a shareholder requests a hard copy of any documentation the company is still obliged to provide a paper copy to the shareholder. Due to the current restrictions that are in place, BEIS intend to temporarily give companies the flexibility to restrict the communication of notices and other meeting documentation to emails, websites and other electronic media. In terms of Annual Reports under the current circumstances lower quality publications which are quicker and easier to produce may be appropriate, provided information is accurate and up to date.
While BEIS anticipate providing the option of an extension to the deadline by which an AGM must be held, it believes the vast majority of companies will wish to hold meetings within their normal timeframes. They highlight that important decisions need to be taken at AGMs (such as the renewal of important corporate authorities) and failure to do so in a timely fashion would have potential repercussions which they think companies and their shareholders would wish to avoid.
BEIS intend to bring forward the legislation to provide flexibilities as soon as possible. For those companies where their AGM is imminent they should refer to the guidance on the Chartered Governance Institute website.
BEIS believe that in most cases extending the filing deadline for companies should be enough to help companies manage their filing and accounting requirements during the current crisis. In some circumstances, companies may consider there is a need to extend their accounting reference period and they can do this on Companies House website. The full implications of such a decision need to be considered.
As well as accounts, companies are required by law to submit various other documents to Companies House. BEIS are monitoring companies’ ability to meet the associated deadlines and highlight that they will take action to provide them with breathing space if necessary.