New law: Limited companies given temporary relaxations to allow shareholder ‘meetings’ to take place, despite the pandemic
The government has introduced temporary relaxations on how a company’s shareholders can ‘meet’ to make decisions, given the temporary restrictions on gatherings of people introduced because of the COVID-19 pandemic.
Legal Alert August 2020
This update was published in Legal Alert - August 2020
Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.
The temporary relaxations say that all UK limited companies can, if they wish, hold shareholders’ meetings (or for companies limited by guarantee, members’ meetings) – lawyers call them ‘general meetings’ - up until 30 September 2020 without shareholders having to physically gather together. The relaxations apply irrespective of pre-existing company law, or what is in the company’s articles of association or other constitutional documents.
The relaxations include that:
- The meeting need not be held at any particular place.
- It may be held, and any votes may be permitted to be cast by electronic means or any other means, so it may be entirely virtual.
- It may be held without a quorum being physically together at the same place.
- A member does not have a right:
- to attend the meeting in person; or
- to participate in the meeting other than by voting; or
- to vote by particular means.
The relaxations do not prescribe how such meetings are to be held. This is left to companies to decide – particularly, to choose technology the company believes will be sufficiently secure.
For companies that still hold an annual general meeting, the Financial Reporting Council and the Department for Business, Enterprise and Industrial Strategy have jointly published useful guidance ‘Measures in respect of Company filings, AGMs and other general meetings during Covid-19’ on best practice for companies that take advantage of the relaxations.
Such companies, including charitable incorporated organisations in England and Wales, should also note that they may be temporarily entitled to an automatic extension to the usual deadline for holding their annual general meeting and/or any general meeting at which their accounts are to be presented to their shareholders/members.
- Companies should consider whether they wish to hold virtual shareholder meetings rather than face-to-face meetings, and which technology to use, under temporary relaxations that allow them to do so.
- Companies proposing to hold a virtual annual general meeting can download FRC/BEIS guidance from the frc.org.uk website.
Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.
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