Company secretaries, directors and others involved in running companies may be wondering how to deal with requirements for the company to convene and hold meetings.
This is a reminder of the English law requirements on meetings, and how these may be met at a time when people are required to self-isolate if even mildly unwell and other restrictions on gatherings, travel and so on may be imposed.
Are company meetings necessary?
The Companies Act 2006 (CA 2006) provides for private companies to be able to take decisions at shareholder level by way of statutory written resolution, so unless the articles require a meeting to be held (and see below on AGMs) there will not usually be any requirement for a private company to hold a shareholder meeting.
For public companies, even if not listed or on AIM, the position is different and they can only pass a resolution of the members at a meeting.
What is a "meeting"?
In most cases, a company meeting will require the attendance of more than one person. There is case law confirming, for example, that one member present alone but holding proxies for each of the other members did not constitute a meeting. The quorum requirement should always be checked. For most UK companies, it is likely to be relatively low.
In some circumstances, CA 2006 expressly allows one person to constitute a meeting. For example, a single member company can have a quorum of one.
Must the members be in the same physical location?
Outside the limited circumstances where CA 2006 states that one person may constitute a meeting, a company meeting will generally require more than one person to attend. Can one or more of them attend 'virtually'?
The Model Articles provide for company meetings to be held by electronic means, allowing each of the members to 'attend' from different locations. Article 37(4) of the Model Articles for private companies states that in determining attendance at a meeting, it is immaterial whether any two or more members attending the meeting are in the same place as each other, provided they are able to exercise their rights to speak and vote. There are corresponding provisions in the Model Articles for public companies.
If they have not already done so, companies with older articles (e.g. Table A Companies Act 1985) should update their articles to reflect the relevant provisions of the Model Articles on conducting meetings by electronic means. Amendments to articles require a special resolution (75%). Private companies may make these amendments by way of a statutory written resolution.
The upshot of this is that, if a company's articles provide for company meetings to be held by electronic means, the company may hold a 'virtual-only' meeting, which will be helpful if there is disruption caused by sickness or travel restrictions.
However, the position in practice is rather different for large listed companies, and this is discussed below under the heading Listed company AGMs.
What is the law on annual general meetings (AGMs)?
All public companies are required to hold an AGM.
Private companies are not generally required to hold AGMs. However, if a private company's articles of association expressly state that it must hold an AGM, then it must do so. Such a requirement is fairly unusual, but more likely to be found in the articles of an older (i.e. pre-Companies Act 2006) company.
A general meeting of a private company must be called by notice of at least 14 clear days. The articles must always be checked, as they may require a longer period of notice. There are statutory provisions allowing the members to agree to short notice, but this will only be practical for companies with a small number of members.
For public companies, the notice periods are:
In the case of an AGM, at least 21 clear days; and
- In any other case, at least 14 clear days.
As with private companies, the articles may require a longer period of notice. There are additional requirements for listed company general meetings.
These notice periods do not include the days on which the notice is given or on which the meeting is actually held – this is what is meant by 'clear days'.
It is important that companies comply strictly with the notice provisions in CA2006 and any such provisions in the company's articles, because as a general rule, if the necessary notice period is not given, any business transacted at the meeting will be invalid. Helpfully, however, companies can rely on provisions in CA 2006 and their articles which deem notices to have been received by a certain time. This means that companies are not responsible for making sure that the notice of meeting is actually received by the members.
However, given the difficulties that can arise with notice requirements, especially in a time of disruption, it is advisable for a company to allow a certain amount of leeway in the timetable for giving notice of company meetings.
Listed company AGMs
Although listed companies may have articles which cater for "virtual-only" meetings, in practice these are very rare and investor guidelines recommend that a physical place for the meeting should be provided, where people can attend in person. However, as the quorum requirements for UK companies are relatively low, it should be possible to ensure that the quorum is met and the meeting can be validly held, even if the number of people attending is lower than usual. Companies will need to check that sufficient shareholders are definitely able to attend the meeting. Other shareholders can be encouraged to consider up to date health advice about travelling on the day, and can also be encouraged to appoint a proxy and to submit questions to the board in advance of the meeting.
The Chartered Governance Institute (ICSA) has now published guidance on AGMs and the impact of Covid-19 (coronavirus). The guidance offers suggestions reflecting UK company law and associated regulation. Companies will need to consider their own individual circumstances, including their articles of association (Articles) and any other relevant matters.
ICSA states that companies effectively have five options:
- adapt the basis which you hold the AGM
- delay convening the AGM, if notice has not yet been issued
- postpone the AGM, if permitted under the Articles
- adjourn the AGM
- conduct a hybrid AGM, if permitted under the Articles
As the situation evolves, companies may ultimately have to use more than one of these options.
The guidance looks at the legal, regulatory and good practice issues associated with each option and suggests measures that companies should consider. The document can be downloaded from the ICSA website. Registration as a subscriber is required, but this is free.