Although there is no longer any statutory requirement for private companies limited by shares to hold an Annual General Meeting (AGM) in the same way as public companies, they may still be required to do so by their existing articles of association, or still maintain the practice of holding them once a year. If they choose to do so, they will be subject to the general provisions relating to general meetings. Public companies are still obliged to hold an AGM pursuant to Section 336 of the Companies Act 2006.
The spread of the Coronavirus means that holding and convening general meetings, including AGMs, is likely to prove a challenge. Holding a physical Annual General Meeting presents risks, particularly where a company has a large number of shareholders, and it will be beneficial for shareholders to begin appropriate risk mitigation planning as soon as they are able.
Official Guidance for holding an AGM
Private companies should first check whether they need to hold an Annual General Meeting. Many will not and so the practice can be postponed or dispensed with entirely. For those companies still required to hold an Annual General Meeting, the Chartered Governance Institute has set out the following guidance:
- Delay the holding of the AGM – it may be possible to delay the convening of the AGM under the company’s Articles of Association if the AGM notice has not already been issued to shareholders.
- Adjourn the AGM – this could occur by holding a meeting and then immediately passing a resolution to adjourn the AGM to a later date. This option should only be considered in circumstances where an AGM notice has already been issued and the company’s articles of association do not contain postponement provisions. Whilst the company’s articles may require an initial quorate meeting in order to resolve to adjourn the meeting, there may be some flexibility and so it is important that the articles of association are carefully reviewed.
- Hold a hybrid AGM – if the AGM notice has not already been issued, the Articles of Association may permit the company to hold a hybrid meeting in which shareholders can choose to either attend in person or electronically, provided that the meeting is still quorate. The shareholders should be informed that they are able to participate in the meeting electronically and as many of the shareholders as possible should be encouraged to do so. Unfortunately, it is not currently possible to dispense with the requirement for a quorum of shareholders to be physically present, however this option at least allows a minimum number of people to be present.
With the current uncertainty, it will be more important than ever for most businesses that their AGM is able to proceed. The Government is under increasing pressure to change the law so that remote AGMs may be permitted and we expect that guidance or an update on this matter should be published in the coming weeks.
Each company’s position is likely to differ slightly and experts at SAS Daniels are available to help you navigate this.
Please contact a member of our Corporate Law team to obtain further guidance if you are unsure of whether or how to proceed with your company’s AGM.