Coronavirus - Guidance on Corporate Governance Meeting Continuation

Board Meetings

Directors have much greater flexibility in how they make decisions, compared to the options available for shareholders' decision making.

Where a decision of the directors is required, most companies will be able to utilise a written resolution procedure as an alternative to convening a physical meeting of the directors. This may be provided for by the company's articles of association (Articles) which are effectively the company's rule book as regards to how its internal affairs are governed, in which case the Articles should be referred to for guidance on the correct procedure. If this is not provided for by the company's Articles, then a similar procedure may nevertheless be used to pass a resolution which is unanimously agreed, as boards are able to act informally where they are unanimous.

Alternatively, board meetings may be held remotely. Regardless of whether this is provided for by the company's Articles, it is now generally accepted that board meetings may properly be held by telephone or video conference. If the company's Articles do not provide guidance on this, then best practice will be to ensure that all directors consent to the meeting being held in the manner intended, and to circulate minutes after the meeting for each director to approve. Further practical considerations include ensuring that all attendees have the correct equipment to attend the meeting, and that all attendees are able to clearly hear and communicate to other attendees and identify who is speaking.

If there are issues with a meeting being quorate, for example, because directors are unable to attend due to illness, or because technological issues interrupt proceedings, then there are options other than simply adjourning the meeting. Adjourning the meeting to a future date may not be possible where a decision is urgently required.

One option is for decisions to be made by an inquorate meeting, and then ratified by resolution at a subsequent quorate board meeting. This will be permitted unless the company's Articles specifically prohibit it.

Another option, if quorum issues are anticipated in advance of the meeting, is that the company's Articles may permit directors to appoint alternate directors to participate in their place.

General Meetings Including AGMs

Ideally, general meetings should not be held until less stringent social distancing and isolation measures are in place. Delay convening a general meeting or, if a decision of the shareholders is needed, utilise a written resolution procedure instead. If a general meeting has already been convened by notice being issued, then either postpone (if this is permitted by the company's Articles) or consider options for adjourning the meeting.

However, some general meetings may be required to go ahead. Public companies and private traded companies are required by law to have an annual general meeting (AGM) within six months after the company's year end. Some companies will be unable to delay this. Many which have a 31 December year end will be unable to delay any longer than until the end of June. Some private companies may also be required by their articles to hold an AGM.

If an AGM must be held, then this will need to be adapted to the new measures introduced by the government, which limit public gatherings to two people, except where this is essential for work purposes. Physical attendance at the AGM will only be essential for work purposes where it is essential to meet the quorum requirements. However, most companies' Articles will count shareholders who are represented by proxy (and not physically in attendance) towards the quorum, meaning physical attendance may not be necessary at all for quorum requirements. 

There is limited evidence to suggest that a general meeting may be held entirely by telephone or video conference, however, the law is unclear as to whether some form of physical meeting must be held in order for a meeting to legally constitute an AGM. It is likely, therefore, that two individuals will be required to physically meet to constitute the AGM as a meeting.

Assuming that a physical meeting must be held then, depending on what is permitted by the company's Articles, the best course of action is to:

• restrict physical attendees to two shareholders, which for most companies will be sufficient to constitute a quorum
  
  
• encourage proxy voting by all those shareholders who will not physically attend
  
  
• where the quorum requirement is greater than two, ensure that sufficient shareholders have appointed a proxy to meet the quorum requirement
  
  
• notify all others who might have attended the AGM that they should not attend
  
  
• utilise the power of the chairperson to exclude attendees from the meeting, if necessary
  
  
• hold the meeting at a suitably large venue which it is as near as possible to those who will attend, to facilitate social distancing and minimise travel
  
  
• enable shareholders and others to listen to or participate in the meeting via a video or telephone conference, although this will not constitute formal attendance

Ensure that details of any unusual arrangements are included in the notice of the meeting or, if the notice has already been issued, then communicate the changes to all invitees and include details on the company's website.

For specialist legal advice on any of the issues discussed above, please contact Richard Phillips on 07803 295 150 or Emma Cameron on 07939 261 632 in our Corporate Law team, or complete the form below.