ICSA’s Report on Board Evaluations – A Brief Summary
On 30 March 2021 the provisions of the Corporate Insolvency and Governance Act 2020 (“CIGA”) which allowed purely virtual general meetings will lapse, and the normal rules will apply. ICSA have produced some useful guidance to assist companies in dealing with their general meetings in the light of this change. The guidance includes a summary of the legal position, good practice recommendations and some suggested wording explaining to shareholders the approach a company is taking.
The key point to note is that with the CIGA enabling provisions expiring it will only be possible to hold closed general meetings if legislation and guidance applicable at the relevant time preclude gatherings of more than a very limited number of people. That said, there is no reason that companies can’t strongly recommend shareholders don’t attend the general meeting in person given the risks associated with Covid-19 and of last-minute rule changes.
ICSA notes that unless a company’s articles specifically prohibit virtual attendance at meetings or require shareholders to be physically present to count as attending it can host a hybrid meeting. A hybrid meeting could have as few as two shareholders (or one shareholder and a proxy holder) physically present with the rest of the shareholders attending via an appropriate video-conference facility. The most practical way to facilitate shareholder engagement for most companies is likely to be a hybrid meeting, but of course each company must consider its own position and shareholders.
An important requirement to note is that for a hybrid meeting to be validly held all participants, whether physical or virtual, must be able to participate on an equal basis. Some thought will need to be given as to appropriate software to ensure that this can be done (for example catering for live voting and ensuring that everyone can speak and be heard – and ICSA notes that merely giving virtual participants access to a chat function will not satisfy this requirement and audio is required). Similarly, thought will need to be given to how shareholders can raise questions before and at the meeting however they are attending. Shareholders will also need to be given clear instructions as to the procedures being put in place.
Finally, ICSA highlights that, while it is crucial that the formal notice of the meeting includes only one time, date and place for it, companies should also think about how they can publicise any changes in the arrangements – for example as a result of a further change to the Covid guidance. This could include RIS announcements and postings on the company’s website, subject to the company’s articles of association. Again, the documents convening the meeting should include clear explanations to shareholders as to where they should check for changes arising.
The guidance is clearly written and very practical, and will have value even after Covid restrictions are fully lifted. It is well worth anyone involved in general meetings of public companies reading it.
If you would like further advice on calling general meetings, please contact a member of our capital markets team.
This blog has been drafted and provided by Kingsley Napley LLP. It should be used for informational purposes only. The information is based on current legislation and should not be relied on as an exhaustive explanation of the law or issues involved without seeking legal advice.
John Young is a partner in the corporate and commercial team and specialises in the business needs of entrepreneurial, high growth and family businesses, advising them throughout their lifecycle - from start-up through to listing and beyond.
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