A 2020 AGM season like no other
With the 2020 AGM season upon us, many listed UK companies with 31 December year ends have been busy assessing how they will convene their annual general meetings in light of the compulsory Stay at Home measures now implemented in the UK, which include a ban on public gatherings of more than two persons.
The vast majority appear to be holding their AGMs as “closed meetings” and following the advice set out in the supplementary guidance for UK-listed companies (Guidance) published by Chartered Governance Institute (ICSA) on 27 March 2020.
The Guidance is based on the assumption that the postponement or adjournment of the AGM is not an option for most listed companies who need to renew shareholder authorities, re-elect directors etc. and includes the following best practice advice:
- Attendance: shareholders will not be able to attend AGMs while the stay at home measures are in force as attendance (other than as required to form a valid quorum) is unlikely to fall within the “essential for work purposes” exception to the restrictions. Companies should make clear that shareholders may not attend in person, will be refused entry and should vote by proxy.
- Communication: Information should also be offered about how shareholders can ask questions of directors as traditionally the AGM is the forum for companies to engage with its shareholders. For example, this can include providing the opportunity for shareholders to pose questions prior to the meeting which can be answered and included in subsequent publications on the website. Some companies such as Unilever propose to make a webcast available on its website after its AGM with a short statement by the Chairman and the CEO will respond to questions submitted prior to the AGM.
- Use of poll voting at AGM: Any company that does not usually call a poll on votes at the AGM should consider doing so at the 2020 AGM to ensure that the votes of those shareholders not present at the AGM are counted on the resolutions.
- Quorum: the AGM will be quorate provided the minimum quorum (as determined by the articles of association but usually two persons present in person or by proxy) is satisfied, for example, by the attendance of two directors and/or employee shareholders.
- Directors: Not all directors need to attend the meeting as this is not a legal requirement, but they could be given the option to dial-in if considered appropriate.
- Chair: The articles of association will determine who can chair the meeting (often the board chair or another director, or even a member elected by resolution at the meeting). Proxy forms should appoint the chair of the meeting rather than the board chair or a third party so as to ensure the proxy can attend the meeting.
- Venue: if a meeting has already been convened for a venue that has become unavailable, and the articles allow the board to postpone the meeting or move it, directors should consider moving it to a more controlled venue.
It is expected that legislation will be introduced to allow companies to hold their AGMs in a safe manner and consistent with the current restrictions on movement and gatherings following the announcement by the UK Government on 28 March 2020. While further details of the legislation are pending, the Financial Reporting Council published a Q&A on 17 April 2020 to provide additional information to listed companies.
Companies planning to hold their AGM in the coming weeks and months will need to stay up to date with changes in legislation and guidance – both of which can change quickly.
In these unprecedented times, it may be prudent for companies to consider making changes to their articles of association to permit virtual or hybrid meetings as a means of dealing with some of the practical issues currently arising from the need to hold a purely physical AGM. Although virtual shareholder meetings have not been widely embraced in the UK, it is probably worth considering using this year’s AGM to include the power to hold a virtual or hybrid shareholder meeting in future, even if there is no intention to use it as companies grapple with what the new norm may be following the easing of the Stay at Home measures.
A link to our Covid-19 hub is here where you can find further advice notes and which is updated on a regular basis.
Should you require further information about anything covered in this briefing note, please contact Joan Yu, Peter Wilkie or your usual contact at the firm.
This briefing is a general summary of information as at the date of publication and it should not replace legal advice tailored to your specific circumstances.