As the coronavirus pandemic continues to disrupt travel, with flights in and out of Guernsey extremely limited and anyone coming to Guernsey required to completely self-isolate for 14 days, as well as many travel restrictions also in place internationally, public listed companies need to consider their arrangements for 2020 annual general meetings (AGMs) due to be held in the next few months.
As a reminder, unless it has waived the requirement to hold an AGM, a Guernsey company must hold its first annual general meeting within 18 months of incorporation. Thereafter, it must hold an annual general meeting in every calendar year provided that no more than 15 months shall elapse between each AGM.
The board of directors of a company must act but what are the options for the board of directors and what steps could they take?
Review the Articles of Incorporation
The first step is to review the company’s articles of incorporation which may contain specific requirements relating to shareholder meetings, including their location or method of communicating at the AGMs. The specific rules relating to shareholder meetings will differ for each company depending upon the provisions of their articles of incorporation (Articles), so advice needs to be sought on a case-by-case basis.
Postponing or delaying the AGM
Whilst this may seem like the most obvious option, as stated, above there are time limits within which AGMs must be held, and therefore a postponement may not be possible if to do so means the statutory time limits for holding the AGM would be exceeded.
Even if a company is in a position where it could delay the AGM for a period and remain within the statutory time limits, with the position regarding the pandemic still unclear and social distancing restrictions and travel restrictions likely to remain in place for a considerable time to come the board may simply be delaying the problem rather than solving it.
Another possible solution, provided the minimum quorum is met and subject to any power under the Articles, is to hold the meeting but resolve at that meeting to defer the consideration of the proposed resolutions to another time when all shareholders may attend.
Holding virtual or hybrid AGMs
The directors may consider holding either a virtual meeting (all attendees attend virtually) or a hybrid meeting (a physical meeting plus attendance virtually).
Guernsey law permits general meetings to be held at any place in Guernsey or elsewhere (subject to anything in the company's articles). There will need to be a quorum for the meeting and any member who is in communication with one or more members and can hear or read what is said or communicated by the others will be deemed to be present at the meeting. Standard articles have included attendance by telephone, but the articles should be checked to ensure that the means of communication is not restricted to particular mediums.
This is, of course, subject to the company’s articles which may impose additional limitations.
Virtual and hybrid meetings shareholders should be encouraged to make use of technology. Where shareholders are not in a position to participate using technology, they should be encouraged to submit a conventional proxy form to allow the shareholders to be represented at the meeting and to vote and count in the quorum.
However, these options are still not ideal as they did not easily enable shareholders to actively participate in the meeting.
If a company must proceed with an AGM in the next few months, advice should be sought an early stage in order to determine the best route to take.