With the Government advising against gatherings, company boards should be thinking about switching to virtual meetings both for board and shareholder business. This article briefly outlines some key considerations relevant to this.

Board meetings

Most companies will already be familiar with the process of holding board meetings by conference telephone or video conference. In many instances, a company’s articles of association will specifically provide for this but, even where that isn’t the case, the general view is that boards can still validly carry out business in this way and the courts would be unlikely to question the validity of board decisions taken by telephone/video conference, provided all the necessary formalities had been appropriately followed. These include:

  • Checking the articles of association and following any relevant provisions stipulated in them.
    • Where there are no such provisions then, ideally, obtaining the express consent of each director to the meeting being held by the proposed means.
  • Giving fair and reasonable (as determined by the circumstances) notice of the meeting to each director entitled to receive it (even if they are ill).
  • Ensuring everyone can hear each other.
  • Ensuring compliance with quorum requirements as per the articles of association.
  • Ensuring that each director’s vote on a matter is clearly conveyed, or consensus clearly established, with appropriate allowance being made for the fact that directors will be relying on oral confirmations and will not necessarily be able to see whether or not someone has approved a particular motion. Clear communication is key.
  • Taking minutes of the meeting (including reference to the meeting having been held by telephone or video conference) and circulating them for approval in the usual way.

As an alternative, where the meeting is merely to resolve upon something (without needing to discuss the matter) there is always the option of doing so by way of written resolution instead.
Legal advice and guidance should always be sought where there is any doubt.

Shareholder meetings (including AGMs)

Although it is best practice to amend a company’s articles of association to allow specifically for meetings to be held electronically (whether by video conference or conference telephone), companies do not need express authorisation in their articles of association in order to be able to hold electronic meetings. A senior Queen’s Counsel has confirmed that the EU’s Shareholder Rights Directive (2007/36/EC), which is implemented in the UK by section 360A of the Companies Act 2006, has been adopted in the UK in a manner that permits a company to hold a virtual meeting without also having a physical meeting.

It is important, though, to check the articles of association both for any prohibitions on holding electronic meetings and for any specific provisions regarding the conduct of shareholder meetings, which must be properly followed. In cases of any doubt, legal advice should be obtained.

For example, articles of association may require that notice of a general meeting state the time, date and place of a general meeting – which could mean needing to hold the general meeting (with at least sufficient attendees to constitute a quorum) in a physical place even if attendees are also permitted to join remotely by video conference or conference call – in what would constitute a hybrid-type meeting.

It is also essential that participants have the ability to attend, speak and vote at the meeting, and the notice of the general meeting should contain clear instructions on how to access, speak and vote at it. Careful thought and planning will need to be given to the technology to be used for holding a virtual meeting, so as to allow, for example, for online Q&A and online voting.

Although companies whose shares are publicly traded should consider the matter particularly carefully with their advisers, virtual-only meetings of publicly quoted companies have been held (for example, Jimmy Choo plc did so for its AGM in 2016) but as the AGM may be the only opportunity that shareholders have to meet and address the entire board, several investor bodies have questioned the appropriateness of virtual-only meetings (albeit before the onset of coronavirus).

Companies may have the option to defer, or postpone, convening and/or holding a general meeting until a more convenient time but, under present legislation, public companies are required to hold their AGM within six months after its accounting reference date, whereas private companies whose shares are not traded need not hold an AGM, unless their articles of association otherwise provide. However, if a private company’s shares are traded, then an AGM will be required within nine months after its accounting reference date.

In all specific cases, legal advice should always be taken where there is any doubt. Please contact Edward using the details below for further advice.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.