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01st July 2020

COVID-19: AGMs during lockdown – Update

On 25 June 2020, the Corporate Insolvency and Governance Bill 2019-21 gained Royal Assent and was passed into law as an Act of Parliament (Act).
The Bill passed through an expedited parliamentary process largely unamended from the original Bill submitted in May.

As a reminder, below is a summary of the some of the key measures that will have a temporary impact on how AGM’s and other meetings are held.

Timeframe

The Act will allow companies that need to hold meetings to do so in ways that are aligned with social distancing good practice. The period to which these measures apply is currently between 26 March 2020 and 30 September 2020. The September date is flexible and there is the ability for the Government to extend this end date in stages up to 5 April 2021.

Types of Organisations

The measures will apply to organisations including:

  • a company within the meaning of section 1(1) of the Companies Act 2006 – this includes limited companies by shares and guarantee, unlimited companies, public companies and community interest companies
  • a charitable incorporated organisation within the meaning of Part 11 of the Charities Act 2011
  • a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014
  • a society that is registered within the meaning of the Friendly Societies Act 1974 or incorporated under the Friendly Societies Act 1992
The Government has confirmed in a letter that the Act will benefit all incorporated charities but will not apply to unincorporated social enterprises, credit unions or charities established as either trusts or unincorporated associations.

Furthermore, these measures will not cover charities formed by Royal Charter or an Act of Parliament. These charities will need to rely on the Charity Commission’s assurances that it will take a pragmatic and realistic approach when assessing breaches of a charity’s governing document during this time.

The types of meetings covered by the Act include general meetings (e.g. AGM’s) and meetings of members (which includes shareholders) and/or delegates of companies.

Revised Procedure for Meetings

Any meeting that is required to be held during this time is subject to the following relaxations of requirements in legislation/Articles of Association etc:

  • Meetings will not be required to be held in any specific place
  • They may be held, and votes cast, by electronic or any other means
  • They may be held without any number of those participating in the meeting being together at the same place.
The Act also stipulates members of a company will not have the right to:

  • Attend the meeting in person
  • Participate in the meeting other than to vote
  • Vote by particular means
Deadline Extension

If a company has a duty, either statutory or through its Articles/constitution, to hold an AGM in the period between 26 March and 30 September 2020, the Act allows an organisation to extend the deadline to hold its AGM until 30 September 2020.

For more information or advice on anything raised above, please click here to contact David James or Thomas Leach.
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