On 20 May, we finally saw the first reading of the long-awaited Corporate Insolvency and Governance Bill
that was originally announced by the Secretary of State for Business, Energy and Industrial Strategy in late March.
The promise was that it would provide Issuers with some certainty around meeting some of their statutory obligations during the current national health crisis. The Bill has been drafted to allow Issuers to hold their shareholder meetings electronically or by other means regardless of the provisions contained currently within the Companies Act or their articles of association.
The Bill has addressed the existing perception that a ‘place of meeting’ may need to be a single physical location. It clearly states that participants do not need to be in the same location and has also made it clear that during this crisis shareholders will not have a right to attend in person.
The provisions found within the Bill will apply retrospectively from 26 March until 30 September, unless extended by the Government. This may be welcome news for any Issuer who is yet to hold their meeting or has adjourned or postponed their original AGM. There are also provisions that will allow the Secretary of State to enact secondary legislation in regard to a number of matters that may include, notices and other documents related to shareholder meetings.
On 3 June the Bill passed through all further
stages of the Commons and is anticipated to be read by the House of Lords throughout
the rest of June with last scheduled reading taking place on the 23 June. It is anticipated that the legislation will receive Royal Asset shortly
thereafter. You may also find it helpful to read our recent AGMs in lockdown blog
which discusses the Bill and other practical issues around holding an AGM during the crisis.
It should also be noted that the Financial Conduct Authority in their latest Primary Market Bulletin (see below) are encouraging Issuers to find ways to ensure shareholders can ask questions of management and exercise their voting rights when making alternatives to physical meetings.
Just prior to the legislation being debated in the House of Lords, the Financial Reporting Council in conjunction with the Department of Business, Energy and Industrial Strategy, released another updated question and answers document.
This publication also contained a short form best practice guidance for AGMs. This guidance asks companies to consider:
- Issuing communications in a timely fashion to investors;
- Ensure clarity is provided on proxy voting;
- Explaining procedures for the meeting and any communications prior to it;
- Providing the opportunity for investors to ask questions and receive responses prior to voting where in real-time virtual meeting, or via proxy;
- Making answers to questions available both at the meeting and in full written form after the meeting; and
- Offering a physical meeting to all investors once restrictions are lifted.
They also make clear that later in the year they will be publishing a fully considered assessment of meeting best practice which will be reached by working with representatives of companies and shareholders.