The UK Government has proposed legislation to address the difficulties faced by UK companies as a result of the COVID-19 pandemic when it comes to holding meetings of shareholders and filing documents with the UK Registrar of Companies (Companies House).
On 20 May 2020, the Corporate Insolvency and Governance Bill (The Bill) was published. The Bill has had its first reading and the Government intends to fast-track it through Parliament. The Bill is subject to change and will not become part of UK law until enacted (although there are various provisions designed to have retrospective effect).
The Bill includes the following in relation to company meetings and filings:
The Bill includes various provisions to make it easier for UK companies to hold meetings at this time, in light of lockdown and social distancing measures. In some cases these provisions would override the constitution (articles of association) of the Company.
The provisions apply to meetings held between 26 March and 30 September 2020 and they can be amended by subsequent Regulations to shorten the 30 September 2020 date or extend it by periods of up to 3 months (but not beyond 5 April 2021) (the Relevant Period).
The Bill is designed to apply retrospectively, so that proceedings at meetings held after 26 March 2020 may be validated if they would otherwise be in breach of legal requirements and the provisions of the company's constitution.
The Bill provides that in relation to meetings of shareholders and classes of shareholders of UK companies:
- Meetings do not need to be held in a particular place and may be held by electronic means;
- The specified quorum does not need to be present in the same place;
- Votes can be cast by electronic or other means; and
- Persons attending the meeting have no right to attend the meeting in person, to participate in meetings other than by voting or to use a particular method of voting (such as by show of hands).
The Bill allows the Secretary of State to make Regulations regarding the form of, and the means and timing of the sending of, notices and other documents relating to meetings. Once again, these Regulations may amend existing laws and override provisions of a company's constitution.
Annual General Meetings (AGMs)
Where a company was required by law or by its constitution to hold its AGM (and, for a public company, the meeting where it was due to lay its accounts before members) during the Relevant Period, that meeting can be held at any time before the end of the Relevant Period (ie. before 30 September 2020 (unless that date is changed by subsequent Regulations)).
In considering whether to put back the date of its AGM, a listed company would also need to consider when the share allotment and pre-emption waiver authorities and approvals given at its previous AGM will expire.
Public companies – period for filing accounts and financial reports
UK public companies which were otherwise due to file their accounts in the period after 25 March 2020 and before 30 September 2020 will have until the earlier of 30 September 2020 and the 12 month anniversary of the end of their relevant accounting period to do so. The Companies Act 2006 normally requires the accounts of a public company to be filed within six months of the end of the accounting period.
For public companies with shares admitted to trading on public markets, the time periods allowed by applicable market rules for the publication of accounts should also be considered. For example, public companies with shares listed on the London Stock Exchange's Main Market, which have the UK as their home state, may be given an additional two months to publish their audited annual financial reports (an extension to the four month period normally allowed). A company with its shares listed on AIM can apply (through its nominated adviser) for an extension of up to 3 months if its financial year ends between 30 September 2019 and 30 June 2020 (an extension to the six month period normally allowed).
The Bill also enables the Secretary of State to make Regulations to temporarily extend various filing dates.The Regulations may extend deadlines for filings including accounts, confirmation statements, the registration of charges and director and secretary appointments and resignations. Periods must not exceed 42 days where the original requirement was up to 21 days, or 12 months where the original requirement was for 3, 6 or 9 months.
We welcome these pragmatic proposals from the Government. However, they have been quite a long time coming and clients have had to navigate the very difficult logistics caused by the current crisis over the past 10 weeks. We have already had clients holding shareholder meetings with a basic quorum of two and we have created our own set of precedents for shareholder meetings, including AGMs, to be held in accordance with the COVID-19 lockdown and social distancing rules. So, as the lockdown is now easing, the "horse has bolted" somewhat, but at least companies will have some assurance that actions they have already had to take may be effectively ratified in law.