We set out below some practical steps UK companies may wish to take to mitigate the impact of the coronavirus (COVID-19) on their upcoming AGM.
Should you go ahead with your AGM?
Yes. Absent any specific statement from the UK government, we would not advise delay in posting AGM notices or the adjournment of AGMs.
Public company AGMs have to be held within six months of a company’s year end; in addition, many of the authorities given by shareholders in the 2019 AGM will expire and require renewal.
Companies should check their articles of association to confirm the required quorum to proceed (typically this is a very low threshold of two members).
How should you conduct your AGM?
If a company is permitted by its articles of association to conduct a hybrid AGM (with shareholders able to attend either via a physical place of meeting or electronic access), we recommend taking this approach.
If a company’s articles of association do not allow for hybrid meetings, as is commonly the case, we recommend that companies hold a physical meeting and arrange a webcast (ie broadcast the meeting live) for the benefit of shareholders unable to attend.
Companies might also consider coupling the invitation to the webcast with an ability to submit questions in advance which would then be answered at the meeting. While a webcast is a positive step for investor relations, and may serve to reduce the likelihood of shareholders impacted by COVID-19 attending a physical meeting, companies should be aware that shareholders participating in the webcast will not be counted as present at the meeting for technical purposes.
Where possible directors should attend the physical meeting, although if there are issues with travel then questions to the board could be dealt with by telephone participation. We would expect shareholders to focus on the physical attendance of the Chair, CEO, CFO and, where a company is putting forward a new remuneration policy, the chair of the remuneration committee.
The articles of association of many companies permit entry to an AGM to be refused on the grounds of ‘security’. Companies wishing to impose restrictions requiring, for example, self-certification from attendees with regard to COVID-19 or recent travel, will need to review their articles of association to ensure that proposed security procedures are permitted. This is an area in which practice may evolve in the coming months.
Where attendance at the AGM has been impacted by COVID-19 issues, companies may want to consider offering a shareholder engagement event later in the year to allow, in particular, retail shareholders to ask questions of the board.
Do you need to make any changes to your AGM notice?
No, instead we recommend including additional language in your Chair’s covering letter:
- noting the issues caused by COVID-19 and providing that the company will update shareholders with any special ‘security’ arrangements through its website. This approach will provide some flexibility for companies in relation to arrangements at the meeting, on the basis it will be easier to update the website rather than try to anticipate now what procedures might be required; and
- encouraging and explaining the use of voting by proxy in the event that people decide not to travel (and noting that they can still vote in person if they wish to do so at the meeting).
For more information about the legal implications of COVID-19, please visit our coronavirus alert centre.