As the 2020 AGM season gets underway, we highlight key issues for companies when planning and holding their AGMs in light of the challenges posed by the outbreak of coronavirus COVID-19 in the UK and elsewhere.
The situation is rapidly evolving, but it’s possible that, in the coming weeks and months, people will be advised to avoid large gatherings and restrict travel. By putting sensible plans in place, companies can be as well prepared as possible to meet these challenges in the context of their AGM.
Can the AGM be held as a virtual or hybrid meeting?
A virtual meeting involves no physical meeting at all. Legal and investor protection concerns raised by stakeholders, including market participants and advisors, mean that this is unlikely to be a realistic option for UK-listed companies (even if the articles permit such a meeting to be held).
A hybrid meeting could be feasible, but few companies have held such a meeting to date. A hybrid meeting is a combination of a physical and virtual meeting enabling shareholders either to physically attend the meeting or participate online. Some companies have included provisions in their articles enabling them to hold such hybrid meetings. These companies will need to consider, in view of the additional time and costs involved, whether a hybrid meeting is practical in their circumstances. Companies that have not yet included appropriate provisions in their articles allowing hybrid meetings should consider doing so this year to give themselves maximum flexibility in the future.
Planning a physical meeting
If a hybrid meeting is not possible or practical, companies can take steps to facilitate shareholder engagement in the AGM even if they are not able to attend in person, or are discouraged from doing so in light of public health advice. These include:
- encouraging shareholders (whether by an RNS announcement or other forms of communication) to submit proxies ahead of the AGM to ensure their vote is counted;
- enabling shareholders to observe the meeting by way of a livestream webcast, noting that such shareholders may not be regarded as legally present at such meeting; and
- implementing processes to enable shareholders to ask questions before the meeting and have them addressed either at the AGM itself or on the company's website. In the case of a webcast, it may also be possible (if the relevant technology allows) for the chair to exercise their discretion to allow questions from observing shareholders during the meeting itself.
Can the AGM be delayed?
UK public companies must hold their AGM within six months of the financial year-end. Many companies with December year-ends typically hold their AGMs in April or May. If feasible, however, companies may consider delaying the AGM to June to take full advantage of this six-month period, with the possibility that the prevalence of coronavirus COVID-19 will by then have diminished.
If the meeting has already been convened, companies should review their articles to familiarise themselves with any powers to postpone the AGM or adjourn it to a later date, should holding the meeting become difficult. Generally, however, a meeting may be postponed or adjourned only for a relatively short period and companies should also consider any impact on the expiry of current shareholder authorities (for example, those to allot shares).
Should you wish to discuss the issues raised in this alert, please contact your usual DLA Piper Corporate contact.