10/03/2020

Companies with AGMs scheduled over the coming months are advised to consider alternative solutions in the event that their AGM cannot proceed in the usual manner. The impact of COVID-19 is likely to have a greater impact for companies, where the board and shareholder base are international.

Companies should follow and monitor up to date guidance issued by the HSE, government and international organisations monitoring the impact of Coivd-19, as circumstances may change at short notice.

Measures to Reduce COVID-19 Transmission at AGM

Companies are recommended to enclose a notice alongside their AGM Notice setting out “measures to reduce COVID-19 transmission at AGM”. For companies who have already issued their AGM notice, this may be issued as a follow-up communication.

The notice should include the following details:

  • the company considers the well-being of shareholders, attendees and staff a top priority and has implemented, and will continue to implement, the measures advised by the HSE to minimise the spread of COVID-19 (a copy of the most recent HSE flyer on COVID-19 may be included by hyperlink or in hard copy);
  • shareholders are strongly encouraged to appoint a proxy to attend and vote at the AGM on their behalf, as the preferred means of fully and safely exercising their rights, as personal attendance at the AGM may present a risk to themselves and others;
  • shareholders are encouraged to submit questions in advance (using the facility outlined in the AGM documents);
  • that the AGM will be held in accordance with HSE guidance, accordingly:
    • the meeting will be as brief as possible;
    • personal attendance is not recommended and shareholders are encouraged to appoint proxies;
    • lunch/ refreshments will not be provided;
  • how to participate in the AGM electronically (where appropriate);
  • that the meeting (or aspects of it such as the CEO/ CFO presentation) will be made available via webcast. Viewing such a webcast will not satisfy the requirements for participation in the meeting so shareholders are reminded to return their proxies;
  • in the event a change of venue is necessitated (e.g. do to closure/ restrictions on venue) and how this will be communicated to attendees; and
  • recommending that shareholders keep up-to-date with HSE guidance regarding travel, self-isolation and health and safety precautions.

The impact of a potential disruption to the postal service (for service of the AGM notice and papers), including the use of alternative postal services should also be considered.

Proxies

The use of proxies should enable the meeting and voting to proceed with as few people physically present as are necessary to satisfy the quorum requirements.

Companies should consider making an RNS announcement encouraging shareholders to exercise their right to appoint a proxy to attend and vote on their behalf, rather than attending the AGM in person.

Where the form of proxy has not yet been finalised, we would recommend ensuring that there is a full power of substitution included in the proxy (to permit the named proxies in the circulated proxy card e.g. CEO/Chair/GC to onward nominate someone else i.e. representative staff member or counsel) to maximise flexibility in the event of unforeseen circumstances arising.

This approach could allow non-Irish based directors, who due to travel restrictions are unable to attend the physical meeting, to appoint local representatives to act as proxies and chair. The meeting could then take place in Dublin with the local representatives and a representative of the statutory auditor. As noted above other directors and shareholders can join the meeting via electronic means (including by telephone). Even where technically they would not be deemed present at the meeting (depending on the constitution), their active participation even on an informal basis is important from a governance perspective.

AGM Location & Quorum

There must be a physical location for the AGM specified in the AGM notice. The quorum will be determined based on the number of shareholders present in person or by proxy at the meeting, usually with regard to the physical location of the meeting. In general while it will not be possible to avoid the necessity to have a quorum of shareholders (ideally represented by proxy) physically present at the location set out in the AGM notice, it should be possible to hold a quorate meeting with minimal physical attendance.

Companies are advised to continue working towards holding a physical meeting at the location set out in the notice. In circumstances where the AGM venue set out in the notice is required to be moved to another location (for example due to the impact of travel restrictions or closure of a pre-booked venue), there is no prescribed notice period for communicating such a change, however as much notice as practicable should be given, aiming for at least two weeks’ notice may be considered reasonable in the circumstances.

Electronic Participation

Where companies have provisions in their constitution permitting participation at the AGM via technology that permits shareholders to participate and vote electronically, a physical location for the AGM is still required. Even where electronic participation is permitted, companies should prepare for the possibility that the disruption caused by COVID-19 may result in the usual technology being unavailable for the AGM, and therefore electronic participation should not be relied upon to achieve a quorum.

For companies where the constitution does not permit electronic participation, putting in place electronic communication facilities for shareholders may be employed as a means to minimise physical attendance, even where they will not be deemed present at the AGM.  Other mechanisms to keep shareholders informed, without formal participation in the meeting might include; live-streaming the meeting, arranging for shareholders to submit questions ahead of the meeting (via online portal or a dedicated email address), a pre-recorded video of CEO/ CFO presentation, and making a recording or transcript of the meeting available to shareholders after the AGM.

Adjournment or Postponement

Most companies will have the power under their constitution to adjourn the AGM to a different place and/or time where necessary. Subject to the company’s constitution, in order to adjourn an AGM, the meeting must usually first be commenced, before being immediately adjourned.

Where the meeting is adjourned, or the company’s constitution permits postponement, to a later date, it is important to note the statutory requirement to hold the AGM within nine months of the company’s financial year-end, and no more than 15 months since the previous AGM. Companies should also be aware of the date of expiry of their share allotment authorities and any other resolutions passed at the last AGM.

The COVID-19 outbreak is likely to continue for a number of months, and for the majority of companies it is not practical to adjourn or postpone their AGM.

Best Practices

  • Monitor HSE & government guidance ahead of the AGM and encourage shareholders to do likewise
  • Communicate “measures to reduce COVID-19 transmission at AGM”, encouraging shareholders to appoint proxies, and cautioning against personal attendance
  • Issue public shareholder announcement (RNS) encouraging the use of proxies
  • Include powers of substitution in form of proxy
  • Proceed with AGM where possible, in accordance with HSE guidance, with minimal but quorate in-person attendance
  • Discourage physical attendance at AGM:
    • use technology (where possible) to communicate with and deliver information to the board and shareholders (even where this does not amount to formal participation at AGM)
    • make arrangements for shareholders to submit questions in advance of AGM.

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