2021 general meetings and the impact of COVID-19

Of interest to all members arranging general meeting

Holding AGMs and general meetings during the pandemic has not been without its challenges. We will still be in a period of flux during the 2021 AGM season and, based on the Prime Minister’s statement on 22 February, it appears likely that general meetings will be required to be held on a closed basis until at least 17 May and possibly until at least 21 June.

Our long term policy objective is to persuade the government to introduce legislation to enable companies to hold general meetings flexibly, whether during the pandemic or otherwise. An extension of the Corporate Insolvency and Governance Act 2020 (‘CIGA’) beyond 30 March 2021 would have afforded a short term solution. However, the government has been clear that, although it continues to seek the opportunity to introduce the required primary legislation (whether for an extension to CIGA or for something more fundamental) this opportunity is limited, particularly in the short term.

The Institute has consequently convened a working group with the City of London Law Society Company Law Committee and Martin Moore QC, with the support of the Department for Business, Energy and Industrial Strategy (‘BEIS’) and the Financial Reporting Council (the ‘FRC’), to develop this new guidance note. It is aimed at helping public companies plan for an AGM or other general meeting in 2021, particularly given that the possibility of holding a physical meeting with shareholder attendance is unpredictable and in any event susceptible to change, possibly at the last minute. This guidance note is also supported by the Investment Association, the Investor Forum and the Quoted Companies Alliance.

This guidance note speaks as of the close of business on 22 February 2021 and is divided into three sections.

Section 1 provides an analysis of certain legal issues and represents the views of the working group. It has been reviewed by BEIS and is supported by the FRC.

Section 2 of the guidance note sets out the Institute’s good practice recommendations reflecting the expectations of BEIS, the FRC and major investor groups. The central point to be borne in mind is the need to ensure that shareholder engagement should be as effective as it can be given the circumstances. Shareholder engagement is important and can be undertaken in many different ways. While the guidance is aimed at bodies incorporated under companies legislation, it is hoped that section 2 will provide a practical resource for other incorporated bodies such as building societies, mutual and friendly societies, co-operative societies and incorporated charities.

Section 3 provides some sample wording extracts for the AGM circular.

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