Listed Companies’ AGMs – advice from ICSA
Updated as of 22 May 2020
Listed companies have strict obligations in relation to AGMs that may be difficult to comply with given the current restrictions on the movement of people.
On 27 March 2020, ICSA issued guidance on how listed companies can continue to hold AGMs at this time: ICSA Supplemental Guidance. This guidance followed its original statement issued on 17 March: ICSA Original Guidance.
On 20 May 2020 the Government published the Corporate Insolvency and Governance Bill which includes provisions which will assist companies in postponing their AGMs, and holding them by electronic means, during the current emergency. A note on these provisions can be reviewed here.
The message from ICSA is that it is still vital that the board engage with stakeholders, and emphasise the importance of providing information in good time to shareholders to allow them to fully participate in decision-making, and of taking on their views.
Delay, Postpone, Adjourn or Proceed?
Check the ICSA Original Guidance linked to above for full details, and take advice.
- if you haven’t issued your notice yet, you can delay (for up to 6 months after the financial year end) and change the venue (but you will need to announce this to the market, and consider the effect on other matters due to be dealt with at the meeting like dividends, listing rules and DTR statements, remuneration policy approval, AGM authorities (see below));
- if you have issued your notice, and Articles permit (as they usually will) consider postponement: the health of companies’ shareholders, workforce and officers comes first;
- if you have issued your AGM notice and do not have postponement provisions in your Articles consider adjournment;
- reasons to proceed: there may be some reasons companies still wish to proceed with AGMs, for example –
- refreshing AGM authorities (if required, before they expire)
- urgent fund raising.
How to hold an AGM
Given the lockdown, your options for holding an AGM will be severely limited and the meeting should only be held if absolutely necessary. The health of companies’ shareholders, workforce and officers is paramount. However, the AGM is important for any public company, and the lockdown may continue for some while. So holding an AGM can still be done.
Check the updated ICSA Supplemental guidance linked to above for full details and get advice before you continue. Consult with key shareholders on your proposals.
- check the company’s articles of association to ensure you can proceed in the way suggested below (most company’s articles should permit this);
- use tech – if possible to set this up remotely:
- set up an area on your website for details on the AGM and keep this updated;
- add a Q&A section; and
- facilitate on-line voting;
- virtual-only meetings are not viable given they may not constitute valid meetings. However, if the Articles allow this, and you can set up the tech to permit it, companies can conduct a hybrid AGM (a combination of a physical and electronic meeting where viewers can participate (either through audio or video link) as opposed to just a live steaming/audio feed where they can only view/hear). The AGM documentation will need to be adapted to provide for this if you are going to proceed in this way and it will require a good deal of planning and involve considerable cost).
- holding the physical meeting “behind closed doors”;
- to form the quorum, it should be enough to proceed with just 2 people being present (one of whom will be the chairman), for example, an executive director and the company secretary, provided that each is a member, a corporate representative or appointed as a proxy. If the physical presence of more than two is required, the number should be kept to the minimum. In any case, attendees should maintain the required physical distance and the meeting should be as short as possible;
- other directors can phone in if appropriate/desirable (it is good practice for as many of the directors as possible to attend the AGM, but this is not a legal requirement and it therefore does not invalidate the meeting if some (or all) are unable to do so);
- coordinate with registrars and venue providers, if a suitable venue can’t be found, in extreme circumstances the meeting may be held for example at a directors house, with another householder acting as proxy;
- make the notice of the meeting clear on the procedures you are following;
- make it clear that shareholders should not attend meetings in person but advise them how they can stay involved;
- encourage shareholders to vote by proxy;
- encourage submission of questions to directors by email, and consider publishing answers on the website;
- resolutions should be passed by proxy votes and the votes of those in attendance.
- consider holding, and advise shareholders if you decide to, a “shareholder event” at a later date. This won’t be an AGM but could give shareholders a welcome opportunity to ask questions and engage with directors in a more normal setting.
For further information on Corporate Governance, please contact: Paul Lester on 01892 506 336 or firstname.lastname@example.org.