COVID-19: implications for AGMs
1 April 2020: while AGMs are vital for companies, during the current climate the health of directors and shareholders must take priority. Updated guidance suggests companies should review their contingency plans in light of the spread of coronavirus.
In light of the Government’s compulsory Stay at Home measures and the closure of ‘non-essential’ businesses to combat the spread of COVID-19, some companies are struggling to know what to do about their AGMs.
ICAEW recommends this initial and supplementary guidance about AGMs and the Stay at Home Measures. The guidance has been reviewed by BEIS.
As a first step, companies should check their Articles of Association and other relevant matters, and coordinate with registrars and venues. Subject to that, the guidance outlines the following options: adapt, delay, postpone, adjourn or conduct a hybrid AGM (a combination of electronic and physical).
The guidance offers an interpretation of gatherings which are essential work in the context of ensuring that AGMs are quorate. Employee shareholders could play a role.
Proxy voting is ideal for this situation. There is logic in voting in advance, and appointing the Chairman as proxy poses less risk that appointing a specific named director who may fall ill.
The choreography of virtual electronic AGMs needs careful consideration. Formal presentations may be too cumbersome. Shareholders need to be able to ask questions and receive answers, and this dialogue needs to be audible by everybody. Companies should consider what technological support they can offer attendees in order to ensure that things run smoothly on the day.
Outside of formal AGMs, it is vital that boards engage with investors and other stakeholders through the most appropriate channels. The guidance suggests online Q&A facilities for shareholders, and perhaps holding a shareholder event later in the year.
To read the full guidance click here.