COVID-19: Planning for Board Meetings and Annual General Meetings

Coronavirus (COVID-19) is now a global pandemic with its impact not only felt by those who contract the virus and their families, but also by businesses who face an unprecedented level of disruption and uncertainty.

As ever, business needs to continue, albeit modified for the new climate within which we find ourselves, and it is important for company directors to consider the implication of COVID-19 on a company’s board meetings and shareholder meetings given the need to socially isolate and reduce physical interaction with others. Companies will need to mitigate the potential risk posed by the current outbreak by adapting procedures and planning appropriately.

Board Meetings

Conduct of board meetings is almost entirely unregulated by the Companies Act 2006 (CA 2006) and the rules surrounding conduct of board meetings are instead set out in a company’s articles of association. Directors should review the current articles of association of their company to ascertain what they say about conducting board meetings remotely.

Most companies have either adopted Model Articles for private companies limited by shares or where the company was incorporated prior to the introduction of the CA 2006, Table A articles.

Article 10 of the Model Articles provides that “in determining whether directors are participating in a directors’ meeting, it is irrelevant where any director is or how they communicate with each other” and “if all the directors participating in a meeting are not in the same place, they may decide that the meeting is to be treated as taking place wherever any of them is.”

Table A articles do not specifically mention the ability to conduct meetings remotely, however, article 88 states that subject to the provisions of the articles, the directors may regulate their proceedings as they think fit.

It is generally accepted that, unless the articles of association of a company specifically forbid remote board meetings, such meetings may be conducted by telephone or other electronic link. If a board meeting is to be held virtually, it is recommended that all directors give express consent for the meeting to be held in such a manner and the electronic means of communication must be such that everyone can hear everyone else.

In addition, notwithstanding that a board meeting may be held remotely, directors must still be aware of the need to take minutes of their meetings in accordance with section 248 of the Companies Act 2006 and comply with all other requirements set out in their articles of association relating to proceedings of board meetings.

In addition, the following practical matters should also be considered:

• The requirements as to quorum must still be met. If issues arise on a telephone or video conferencing line so as to impact on the quorum, no resolutions should be passed until it becomes operational again.
• Directors must be able to debate and vote on the business at hand therefore all directors should be given an opportunity to contribute to the meeting.
• The Chair should control the meeting as he or she would do so at a physical meeting, and when it comes to voting, all efforts should be made to ensure that each director is provided with the opportunity to confirm whether he or she is for or against a particular motion.
• The minutes of the meeting should confirm that the meeting was held via electronic means and state the enabling provision of the articles.
• As a matter of good practice minutes of each virtual board meeting should be circulated to each director following the meeting to ensure agreement by all in attendance that the minutes accurately reflect the business transacted at the meeting.

General Meetings of Shareholders

A general meeting is a meeting of a company’s shareholders. There are two types of general meetings – annual general meetings (AGM’s) and ordinary general meetings (i.e. meetings of shareholder meetings which are not designated as AGMs).

The CA 2006 does not require a private company limited by shares to hold an AGM and therefore a private company will only have to hold an AGM if it is required to do so by its articles of association. Failure to hold an AGM when required to do so by the articles of association will constitute a breach of that article.

If a meeting is required, for whatever reason, section 306A of the CA 2006 provides that nothing in Part 13 of the CA 2006 precludes electronic meetings provided that those persons who are not together at the same place may by electronic means attend and speak and vote at it. This would include holding meetings by telephone or electronic video link, however, as is the case for board meetings, the articles of association of the company must be reviewed in detail to ensure that they do not in any way, whether directly or indirectly, restrict holding meetings by electronic means.

In any event, best practice would be to amend the articles of association to expressly permit meetings to be held electronically. It should be noted that, notwithstanding meetings may be held electronically, all other usual requirements relating to general meetings and/or AGMs must be complied with.

Given current circumstances it may be more appropriate for companies to use the written resolution procedure set out in Chapter 2 of Part 13 of the CA 2006, rather than hold any physical shareholder meetings. However, it is important to note that if a company is required to hold a general meeting by virtue of a provision of its articles of association, the written resolution procedure cannot be used instead of such provision, as an actual meeting must be held.

Please note the information set out above relates to private companies limited by shares, and not publicly listed companies, traded companies or any other type of company. This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Corporate & Commercial team at Cleaver Fulton Rankin for further advice or information.

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