On Monday 23 March, the UK Prime Minister said the country was facing a ‘moment of national emergency’ and staying at home is necessary to protect the NHS, save lives and tackle ‘the biggest threat this country has faced for decades’. New ‘Stay at home measures’ to tackle the spread of coronavirus were outlined, including a ban on public gatherings of more than two people. 

Company general meetings – supplementary guidance

There are immediate issues to resolve for companies with general meetings coming up within the initial three week period of these new restrictions. In this fast moving situation there are likely to be further limitations over a longer timeframe.

On 17 March 2020, Slaughter and May and The Chartered Governance Institute produced guidance entitled ‘AGMs and impact of Covid-19' [1]. Supplementary guidance has now been produced in the light of the Government’s ‘Stay at home measures’.

The strong message is shareholders must not attend a company general meeting in person. Checking relevant provisions of a company’s articles of association and coordinating with registrars and venue providers is key, as is ensuring shareholders are kept regularly updated. However, keeping shareholders away from meetings and safe whilst at the same time transacting the business of the general meeting via the provisions for proxy voting are essential. 

  • Companies should make it clear in their notice of meeting, or by RNS announcement, that shareholders must not attend a general meeting in person
  • A quorum will be present (directors or employee shareholders) and the attendance of additional people will therefore be unlawful. This wording should be unambiguous and should make it clear that anyone seeking to attend the meeting will be refused entry to the meeting
  • The chair of a general meeting of a UK public company has broad common law powers to preserve order at that meeting, ensure the safety of the attendees and allow the business of the meeting to be transacted. These are likely to be backed up by express powers to do the same in the company’s articles 
  • Shareholders should be strongly advised to use their rights to appoint a proxy and vote remotely on the resolutions being proposed
  • Companies may want to encourage the submission of questions for the board of directors via email or a webpage and post answers the same way
  • Company articles will usually outline whether postponing or adjourning meetings is possible. However, the business of the AGM is likely to cover authorities and the renewal of powers that the company may need to enable them to continue to function appropriately

Changes in other countries

France, Switzerland and Germany are all passing amended regulations to allow changes to be made in how company meetings are held with the emphasis being on the use of digital technology.

Swiss company general meetings with a physical presence are banned until 19 April and the country has authorised the holding of general meetings in writing, in electronic form or by the use of proxy voting. Where a Notice of Meeting has already been issued, companies must postpone the meeting or, if the meeting is to go ahead, the company must ensure that shareholders are informed about their rights to vote via a proxy.

UK

In the UK, our proxy voting facilities and usage is well established both via paper cards returned in the post and electronic voting via web portals, CREST proxy voting and the use of the new Proxymity platform. In the light of this latest guidance around UK company general meetings, the onus is on companies and their registrars to ensure that all proxy voting methods and channels are fully optimised and promoted to shareholders via all available means. This will ensure that good corporate governance and transparency can be demonstrated in the declaration of results on the resolutions put to the company meetings based purely on proxy voting by shareholders.

Proxy voting and paperless

Emphasising the proxy voting options available to shareholders will be crucial in the coming AGM season. 

  • Communications to shareholders should place even more emphasis on proxy voting rights and encourage shareholders to use their rights to appoint a proxy. The communications should give clear instructions about how proxy voting facilities and channels can be accessed and used to record shareholder votes
  • Paper proxy voting cards and other materials can still be delivered. However, the resources needed to produce and deliver physical paper notices/reports and proxy voting cards may be affected if mail delivery is impacted by the spread of the virus
  • Digital and electronic delivery of services to shareholders has increased in recent years and electronic proxy voting should be made available alongside physical paper solutions. Electronic proxy voting is simple, fast and secure
  • ‘Paperless’ proxy solution is now used by many of our client companies which makes the default option for voting at general meetings electronic. This method of proxy voting is simple, fast and secure. Paper voting cards are only issued to shareholders who specifically request them. Whilst employing this approach requires giving notice to shareholders, it may be worth exploring if the time before your AGM allows

To speak to us about your company’s general meeting, contact your relationship manager or graham.butcher@linkgroup.co.uk.

[1] The revised guidance note was produced jointly by Linklaters LLP, Slaughter and May, Clifford Chance LLP, Freshfields Bruckhaus Deringer LLP and The Chartered Governance Institute as at the close of business on 24 March 2020.