COVID-19: Holding shareholders’ meetings for private limited companies in Singapore during elevated safe distancing period

By Sandra Seah, Chelsea Chan

04-2020

In line with safe distancing requirements to fight the COVID-19 pandemic, the Singapore Government has enacted certain measures to assist companies in holding their general meetings. This article outlines the alternative arrangements for the conduct of general meetings by private limited companies. Similar guidelines for listed companies can be found in our other article here.

On 13 April 2020, the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020 ("Order") was issued, setting out alternative arrangements to personal attendance in respect of general meetings. The Accounting and Corporate Regulatory Authority of Singapore, the Monetary Authority of Singapore and the Singapore Exchange Regulation issued additional guidance found here ("Additional Guidance") for companies when conducting their meetings during the elevated safe distancing period.

These alternative arrangements apply to meetings convened during the “Control Period”. This refers to the period from 27 March 2020 to the last day that certain key COVID-19 regulations [1] are in force; and to meetings convened within 30 days after the end of the Control Period if notice of the meeting was given during the Control Period.

Compliance with the Order is not mandatory. Companies may still conduct meetings in accordance with the existing law or legal instrument if doing so would not breach prevailing safe distancing measures.

Overall, the Order prescribes that companies may conduct their meetings through electronic means, notwithstanding that their constitutions explicitly stipulate for personal attendance at meetings or are silent. This is provided certain safeguards are satisfied to ensure that shareholders' rights are not compromised, such as ensuring shareholders have appropriate means to access the virtual meeting and are given due notice on how the virtual meeting is to be run. The notice of the meeting must also be supplemented with further information on how shareholders may exercise their rights in respect of voting, receiving documents and raising questions. Additionally, the chairman of the meeting plays a greater role given that shareholders are only allowed to vote on resolutions by appointing the chairman as their proxy.

On top of fulfilling statutory requirements, general meetings are important for shareholders to decide on key matters concerning their company's business. Many constitutions may not provide for electronic means of conducting meetings, so the introduction of this Order is a very much welcomed endeavour to maintain business-as-usual amidst the pandemic.

Further details on the alternative arrangements set out in the Order and the Additional Guidance are as follows:

1. Conduct of Meeting

A meeting may be conducted by electronic means and companies must do so at no cost to its shareholders. "Electronic means" must at least allow shareholders to contemporaneously observe the proceedings of the meeting by audio and video means (eg. "live" webcast). Companies must also provide for contemporaneous observation of the meeting proceedings by audio-only means (eg. a telephone number).

2. Notice of Meeting

Companies may send notices of general meetings by electronic means in accordance with prescribed timelines, only if the notice is sent to all shareholders at an email address notified by the shareholders to the company. The notice must also be published on the website of the company (if available).

In addition to the date and time of the meeting and resolutions to be proposed, the notices must also contain:

(a) Particulars of the electronic means by which the meeting will be conducted (eg. by "live" webcast);
(b) Details on how the proxy forms should be submitted electronically and through hard copy, and the timeline by which instruments of proxies must be submitted;
(c) The arrangements for shareholders to participate in the meeting by electronic means (such as the link to access the online platform), and any other ancillary information (such as whether shareholders have to pre-register on an online platform); and
(d) Instructions to shareholders on how they may (i) access any documents or information relating to the business of the meeting; (ii) submit their questions ahead of the meeting, the timeframe for submission of questions and how the substantial and relevant questions will be responded to prior to, or at the meeting; and (iii) cast their votes.

3. Attendance at meetings

A quorum may be formed by two (2) shareholders of the company (except where the constitution provides for a quorum of one (1) shareholder) personally or electronically present. A shareholder is electronically present at a meeting if the person: (a) attends by electronic means; (b) is verified by the company secretary as attending the meeting by electronic means; and (c) is acknowledged by the chairman of the meeting as present by electronic means.

Directors and auditors of private limited companies may also attend or be heard at general meetings through electronic means; for example, a live webcast or a conference call.

4. Documents

Companies may continue to send documents (including proxy forms, annual reports and shareholders’ circulars) in accordance with the Companies Act and their constitutions. Specifically, section 387B of the Companies Act allows companies to send documents like financial statements or annual reports by electronic communications (such as e-mails) to the shareholders of the company. Documents required to be laid or produced before a general meeting may be sent with the notice of the meeting.

5. Right to be heard and to raise questions

Shareholders must be given the opportunity to ask questions within a reasonable time prior to general meetings. They should also be informed of any cut-off time within which questions must be submitted and be allowed to submit their questions through electronic means or by post. All substantial and relevant questions must be addressed by the Board of Directors and/or management prior to, or at, general meetings.

6. Voting

Unless the company’s constitutive documents allow for remote electronic voting, shareholders (including those physically attending the meeting) must vote by proxy only and can only appoint the chairman as their proxy. Shareholders should specifically instruct the proxy on how they wish to vote on the resolutions.

A company may allow electronic voting to take place at the general meeting if its constitutive documents provides for this. However, the company must ensure that it has implemented the necessary safeguards to validate votes submitted by shareholders.

7. Proxies

All companies must allow shareholders to submit proxy forms through electronic means as an alternative to physical delivery.

Proxy forms delivered before 13 April 2020 will continue to be valid, and proxy forms appointing persons other than the chairman of the meeting shall be deemed to appoint the chairman of the meeting as proxy, provided that:

(a) For adjourned or postponed meetings, there is no change to the resolutions to be proposed at the adjourned or postponed meeting from those that are contained in the notice of the previously-notified meeting;
(b) Shareholders are provided with the opportunity to withdraw their previously-submitted proxy form and have not so withdrawn; and
(c) Shareholders have specifically directed the proxy on how they wish to vote on the resolutions in their proxy form.

Special thanks to trainee Lim Neng Fang for her contribution to the article. 

This article is produced by our Singapore office, Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only. Please note that the information in this article is accurate as at 27 April 2020. We will continue to monitor the situation and provide updates on any changes as soon as these are communicated to us. Please contact our lawyers if you have any specific queries.


[1] These regulations refer to the COVID-19 (Temporary Measures) (Control Order) Regulations 2020 and the Infectious Diseases (Measures to Prevent Spread of COVID-19) Regulations 2020.