How to hold a company AGM or general meeting in 2021

Companies who need or want to hold a shareholders' meeting – whether an Annual General Meeting or a general meeting ("GM") – in the coming months are facing an uncertain situation with the expiry on 30^th March of the Corporate Insolvency and Governance Act 2020 ("CIGA") provisions on meetings. As we wrote last year in our articles on AGMs and virtual meetings and discussed in a podcast, before CIGA came into force companies had to contend with the logistics of holding a meeting whilst stay at home restrictions were in force, which threw up problems and uncertainties. CIGA's flexibilities for companies, and other types of body including charities, meant that, during the pandemic, companies have been able to hold AGMs and GMs any way they wanted, essentially, regardless of the Companies Act 2006 and of their constitutions.

Over the past year, many AGMs have been held as "closed" meetings with the bare minimum of people physically in attendance to form a quorum and shareholders voting by proxy. Some companies have held hybrid meetings with shareholders able to participate and vote electronically. Other companies have allowed shareholders virtual engagement with the AGM, for example livestreaming the meeting or having a virtual Q&A with the board. Very few entirely virtual meetings appear to have been held; this could, in part, be down to the cost and complexity of running a virtual only meeting and the lack of technology providers for electronic voting in the UK.

What next?

After 30^th March, the flexibilities will no longer be available and companies will have to comply with meetings provisions in the Companies Act 2006 and in their articles of association. Meanwhile, at least for the next few months, social distancing requirements are likely to remain in place, making traditional physical meetings attended by many shareholders impossible. The legal uncertainty around entirely virtual meetings remains and clarity is being sought from the Government on this. So where does that leave companies who need to hold a shareholder meeting after 30^th March?

The Chartered Governance Institute and the City of London Law Society have just published a guidance note on 2021 AGMs ("the Guidance"), which has the backing of the Department for Business, Energy and Industrial Strategy and the Financial Reporting Council. The Guidance looks at options available to companies in the coming months, sets out good practice recommendations for 2021 AGMs and gives sample wording for notices of meetings and communications with shareholders to cater for the uncertain landscape.

How can a company hold an AGM in 2021?

Companies will not be able to prohibit shareholders from attending an AGM – unless lockdown measures are in force – but will need to consider public health issues and rules on gatherings when planning an AGM. Shareholders could be strongly encouraged not to attend and to appoint the chairman of the meeting, who will be at the physical meeting, as proxy.

Until the uncertainty about the legality of entirely virtual meetings is resolved, companies may be better advised not to go down the virtual only meeting route, after CIGA falls away, and to hold off amending their articles to allow virtual meetings, to avoid questions about validity of resolutions passed.

Hybrid meetings allowing virtual participation and voting by shareholders may be the best option for 2021, although the need for a physical meeting could cause public health concerns as no limit can be put on the number of shareholders allowed to attend, from a legal point of view. The Guidance suggests ways of dealing with this, including contingency plans to adjourn a meeting for public health reasons. Companies planning a hybrid meeting also need to put in place plans for tech failures to ensure meetings are valid. Amendments to articles may be needed to deal with these contingencies, even if nothing in the articles precludes a company from holding a hybrid meeting, but this will depend on the company's constitution in each case.

In short, 2021 may turn out to pose more issues for AGMs and GMs than last year and companies should plan well in advance of any shareholder meetings.

For further advice on holding an AGM or GM in 2021, please get in touch with your usual Corporate contact at Brodies.