Update on AGMs and Corporate Filings under the Corporate Insolvency & Governance Bill 2019-21
Following its initial announcement on 28th March 2020, the Department for Business, Energy and Industrial Strategy (BEIS) introduced the draft Corporate Insolvency and Governance Bill (the Bill) on 20 May 2020. In response to practical concerns arising from the Covid-19 pandemic, the Bill introduces temporary measures designed to offer public limited companies certain flexibility around the way they conduct shareholder meetings, as well as offering extensions to certain statutory company filing periods.
Once implemented, the measures will take effect from 26 March 2020 and will override any contrary provisions under the Companies Act 2006 or a company’s constitution.
Below is a summary of the key measures in the Bill relating to general meetings and company filings:
Conduct of Meetings: Virtual AGMs
UK public companies typically are not permitted by their Articles of Association to hold electronic or ‘virtual’ meetings.
Under the current proposals, the Bill would allow public companies to override their Articles to allow AGMs to be held, and votes taken, by electronic means. Further, shareholders will not have a right to attend the AGM or other meeting in person and meetings will not be required to take place at a specific physical location.
Such relaxations will apply temporarily up to 30 September 2020 (subject to any extensions by the UK Government).
Extended Deadlines: AGMs and Accounts Meetings
Public Company AGMs
Under the Companies Act, a public company is required to hold its AGM within six months from the end of its financial year. Once the Bill has passed, public companies that were due to hold their AGMs between 26 March and 30 September 2020 will be able to postpone holding their AGMs to any time on or before 30 September 2020.
The UK Government reserves powers to extend the period required to hold an AGM by a further 8 months at its discretion.
Directors of public companies will also have until 30 September 2020 to lay copies of their annual accounts and reports before the company at a general meeting.
Although the accounts would typically be laid at the AGM, this measure may be particularly useful for public companies who are experiencing delays in publishing their accounts due to the on-going coronavirus (COVID-19) outbreak and so otherwise may have to hold a separate accounts meeting following their AGM.
Corporate Filings: Reserved Powers
The Bill contains measures to extend various statutory deadlines for companies looking to file certain information at Companies House.
Filing of Statutory Accounts
The Bill provides for a temporary extension to the period within which a public company must file its accounts and reports with Companies House, where such accounts are required to be filed between 26 March and 30 September 2020. Under the Bill, a public company may delay filing its annual report and accounts to the earlier of 30 September 2020 or the last day of the period of 12 months immediately following the end of its accounting reference period.
Routine Corporate Filings
The Bill would also give the UK Government powers to implement further regulations to extend the deadline for routine filings at Companies House, including for:
- annual confirmation statements;
- to register a legal charge; and
- the period for making certain ‘event-driven’ filings under the Companies Act (notifying a change in directors, a change of registered office or a change to the company’s PSC Register).
If company filing periods are shorter than 21 days, further regulations may be introduced by the UK Government to extend the filing deadline to up to 42 days. For filing periods between 3 to 9 months, the UK Government will have powers to grant a further 12 month extension.
The Bill provides for such powers to expire by 5 April 2021.
At the time of writing, Parliamentary debate on the Bill is expected to take place in the House of Commons from 3 June 2020 and in the House of Lords commencing in the week of 8th June 2020.
Once implemented, the Bill should grant substantial flexibility for public companies looking to either postpone their AGMs or to file their accounts until 30 September 2020.
We will keep you updated of any changes to the draft text of the Bill once the legislation has been implemented.
Please follow this link to the draft text of the Bill.
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 Peter Kohl, 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.