AGM season will soon be upon us. One of the many challenges social distancing measures has presented is how to hold AGMs and other General Meetings, particularly if there is a large open shareholding membership.
Many Registered Society rule sets still require AGMs to be held unless bespoke rule amendments have been made, allowing the board to dispense with holding the AGM or removing the requirement to hold one altogether. Most constitutions don’t allow for shareholder meetings to be held “virtually” in the same way that Board meetings can be, and whilst reduced quorum requirements may help, with most modern rule sets often requiring a minimum of two shareholders to be present in person, holding General Meetings this way may still not be feasible or even palatable given continuing social distancing measures.
Holding a General Meeting by “virtual” means in the absence of or contrary to provisions allowing such will technically be in breach of your constitution and could open up the risk of shareholder challenge. Whilst the risk of challenge is minimised if you have closed shareholding membership, some Registered Societies still have open membership or may be seeking to make changes to their constitution and may be concerned regarding the validity of the same.
With a collective sigh of relief, the Corporate Insolvency and Governance Act 2020 (the Act) received Royal Assent on 25 June 2020 and has therefore been passed into law. The Act will temporarily solve the issue in relation to General Meetings (including AGMs) on their timing and the ability to hold them remotely or virtually. Particularly, the Act:
- Gives a temporary ability for general meetings to be held by “virtual” means, e.g. through video conferencing or similar facilities, even where your rules wouldn’t otherwise allow for this; and
- Also extends the period during which an AGM can be held up to 30th September 2020, if you should have held it to a deadline before that date.
However, the Act only helps in holding virtual AGMs on a one-off basis for this year. On that basis, we are supporting a number of Registered Societies during the grace period afforded by the Act on changing their rules so that they can:
- Have the option to dispense with holding AGMs in future years; and
- Choose to hold them and any other general meetings virtually in any event.
For more information
If you have any queries relating to this or other governance matters, then please do contact our Governance Team:
Peter Hubbard
Victoria Jardine
Catherine Simpson
Sarah Patrice
