Takeaways

UK public and listed companies will need consider a raft of issues in preparing for their annual general meetings, including alternative virtual or hybrid formats, in order to comply with the statutory requirement to hold such meetings within six months from financial year end.
Companies may wish to consider the use of electronic signatures where wet ink signatures are impracticable due to remote working. There may be other limitations related to execution formalities, particularly with regards to deeds that may require witnessing.
Companies House and Her Majesty’s Revenue & Customs have relaxed certain requirements relating to the submission of annual accounts and wet ink stock transfer forms to provide greater flexibility to companies.

The social distancing measures implemented by the government in response to the COVID-19 pandemic have prompted many businesses to adapt their daily practices and governance at relatively short notice. This briefing considers some practical and logistical considerations that can assist companies and their directors and officers in navigating the management of the business during this rapidly evolving period.

Public Companies

Many UK listed companies are currently preparing for their annual general meetings (AGMs), as the Companies Act 2006 requires a public company to hold an AGM within six months of its financial year end. The social distancing measures implemented by the government with the associated restrictions on public gatherings mean that most UK listed companies will need to consider the changes required to their traditional AGM format.

Although UK public and listed companies have recently been granted concessions in the form of a three-month extension to the accounts filing deadline at Companies House (see further “Companies House filings” below) and an additional two months to publish annual financial reports for Main Market companies (three months for AIM companies), these concessions do not discharge the requirement to hold an AGM within the statutory deadline, and the government has yet to publish any legislative changes or guidance on this subject. 

A checklist of non-exhaustive key considerations surrounding alternative AGM arrangements is set out below.

  • Maintain a physical meeting:
    • Consider quorum requirements under the company’s articles of association (Articles) and the availability of a suitable venue—in the absence of an alternative, this could be a director’s home with a household member nominated as a proxy for quorum purposes (if the Articles so permit);
    • Actively encourage proxy voting and the submission of shareholder questions ahead of the AGM (for example, through an online Q&A portal available on the company’s website);
    • Organise a live-stream or telephone link to the AGM, upload presentations ahead of the AGM on the company’s website, or provide a recording of the AGM after the event—although shareholders will be unable to formally participate in the meeting, these measures, together with proxy voting and Q&A submission, should provide shareholders with a limited form of engagement in the circumstances;
    • Keep shareholders informed of AGM arrangements through public RIS announcements, recognising that the situation is still evolving daily and therefore multiple announcements may be unavoidable; and
    • Consider revising the company’s Articles to include provisions permitting a virtual and/or hybrid AGM in the future.
  • Hold a virtual or hybrid meeting:
    • Check the company’s Articles to confirm whether a virtual (fully online) or hybrid (combination of a physical meeting with a form of electronic participation) AGM is permitted;
    • Ensure the AGM notice, subsequent RIS announcements and website communications include clear instructions for shareholder registration, participation (including the method for asking questions at the AGM) and voting on a poll, including a helpline contact at the company or registrar to deal with administrative and/or technology-related queries;
    • Consider the technological implications, including the meeting format (audio and video or audio only), user accessibility, data security, management of Q&A, shareholder participation and voting arrangements (a “dry-run” of the AGM would also be advisable to iron out any technology issues); and
    • Balance any such measures against the proportionate cost considerations of offering an AGM in this format, including engaging a suitable and reputable technology services provider if necessary.

If it is not possible to hold an AGM in the short-term, UK public companies could consider the following options:

  • Delay or postpone the AGM – if an AGM notice has already been circulated, a UK public company can delay its AGM to a later date (or alternatively, postpone its AGM if permitted by its Articles and an AGM notice has not yet been circulated). However, absent government intervention, a company will still need to hold an AGM within the statutory deadline, and will also need to factor in the 21 clear days’ minimum notice requirement (though institutional bodies are less likely to object to AGMs being held on less than 20 working days’ notice as per the best practice guidance set out in the UK Corporate Governance Code), so the utility of a delay or a postponement may be limited1.
  • Convene and adjourn the AGM – if an AGM notice has already been circulated and the Articles do not permit postponement, then a company may consider (as a last resort) convening a meeting (which will typically need to be quorate) and then adjourning it to a later date. However, there are a number of issues that a company will need to evaluate ahead of taking such action, including whether to publicly announce the intention to adjourn an already convened meeting, providing an alternate time and place for the adjourned meeting within the statutory deadline, recirculating the AGM notice where a meeting is adjourned more than 14 days from the original date, arrangements with its AGM service providers including the venue, and whether financial calendars and other shareholder communications need to be updated or revised as a result of the delay.

In addition, UK public companies considering holding an AGM outside of its usual corporate timetable will also need to bear in mind the expiry date of its existing shareholder annual authorities (e.g. in relation to share allotments, the disapplication of pre-emption rights and share buy-backs) which typically expire on the earlier of the next AGM date or 15 months after the date of the AGM at which they were granted, implications for any FCA regulatory disclosures included in the annual report that may need to be updated and the knock-on effect of delays in approving final dividends and new remuneration policies.

ICSA (the Chartered Governance Institute) has published additional guidance on contingency planning for AGMs during the COVID-19 pandemic (supplemented as of 27 March 2020), which can be accessed here. The FCA has also published the 27th edition of its Primary Market Bulletin, which is dedicated to COVID-19 and UK listed company-specific issues (updated as of 20 April 2020 and available here), and recognises that the effective exercise of shareholder rights (including through general meetings) may need to involve virtual methods as a result of the pandemic.

Board Meetings

Company directors may find that meetings are required more frequently to deal with the challenges facing the business as a result of COVID-19. Many boards routinely use conference calls as a way to hold board meetings remotely.

When deciding whether to hold a board meeting electronically or by telephone, first recourse should be made to the company’s Articles. Many Articles expressly state that directors can convene their board meetings electronically. For companies incorporated with Model Articles, Article 10(2), provides that “it is irrelevant where any director is, or how they communicate with each other”. For older companies incorporated with Table A Articles, the position is less clear, however it is generally accepted that board meetings can be held by telephone or virtually in the absence of any express wording in the Articles to the contrary.

When holding a virtual or telephone board meeting, in the interests of good order it is advisable to:

  • give each director express notice that the meeting will be held electronically (for example, when circulating the agenda ahead of the meeting) and to obtain express consent from the directors to hold the meeting in this way;
  • circulate clear access information (e.g. dial-in details or a link to the relevant website for the video conference) in advance;
  • ensure that the arrangements are such that each director can participate fully (for example, ensuring that the joining instructions are clear and that each participant is aware of the key features of the relevant software); and
  • circulate board minutes to each director for approval after the meeting to ensure the minutes accurately reflect the business discussed and transacted.

Written Board Resolutions

For the majority of companies, their Articles permit board decisions to be made by way of a written resolution, which must usually be signed by every director eligible to vote on the particular decision (electronic signatures are permissible for these purposes under the Companies Act 2006). A written board resolution could provide a practical alternative to hosting a board meeting, particularly where a simple unanimous decision is required to be made by the board.

Companies House Filings

Companies House has closed its Belfast, Edinburgh and London offices (though Cardiff remains open to receive documents), as well as the telephone helpdesk, and suspended same-day services. Delays in processing paper forms are also to be expected. 

However, most UK companies can use the Companies House WebFiling system to submit company filings electronically, such as the annual confirmation statement or updates regarding the directors or the company’s share capital. Companies can register for the service on the Companies House website, and a six-digit alphanumeric authentication code is required to make filings. If the authentication code has been lost, a new code can be requested from Companies House and is typically delivered within five working days (though the authentication code can only be delivered to the company’s registered office address).

The government has announced that UK companies can apply online for a three-month extension to file their annual accounts at Companies House. Applications will be approved automatically if the reasons cited relate to COVID-19. Detailed government guidance on the extension can be accessed here.

Stock Transfer Forms

HMRC has announced that it has relaxed its requirement for wet-ink stock transfer forms to be submitted for stamping and will not be accepting hard copy documents until further notice. HMRC will accept e-mails attaching an electronic copy of the stock transfer form, such as a scanned PDF or an electronically signed version. It is advisable to allow at least 20 working days for HMRC to complete stamping.

Electronic Signatures

Remote working may create difficulties in obtaining wet-ink signatures, particularly if the signatory does not have ready access to the facilities to print or post the hard copy document. The general position under English law is that electronic signatures are valid in place of wet-ink, provided that there is an “intention to authenticate” the document and that any other execution formalities (contractual or statutory) have been satisfied.

There is no specific form of e-signature prescribed by English law; e-signatures can range from a signatory typing their name into the signature block, to the use of specialist e-signature platforms such as DocuSign.

Deeds

Whilst deeds can also be validly executed electronically, the formalities related to their execution may pose further issues during COVID-19 (in particular, whether the signatory is an individual or a company).

An individual signatory to a deed must sign in the presence of a witness. The witness must be physically present during signing; a video link will not be sufficient.

An English company can execute a deed in one of the following ways:

  • by affixing the company’s common seal;
  • by the signature of two directors or one director and the company secretary;
  • by the signature of one director in the presence of a witness; or
  • by an authorised signatory in the presence of a witness.

Execution by two directors (or one director and the company secretary) on behalf of the company will alleviate the requirement for a witness. However, where there is only one signatory permitted or available, e.g. (e.g. in a sole director company), and that individual is unable to sign in the presence of a witness, consider whether it may be beneficial to appoint another authorised signatory under a power of attorney for the purposes of executing the relevant document.

Under established English case law, a witness must not be an existing party to the deed. In addition, although it is preferable as a matter of best practice for a spouse or adult family member not to act as a witness to a signature, a signature witnessed by such person is not prohibited under English law.


Pillsbury’s experienced, multidisciplinary COVID-19 Task Force is closely monitoring the global threat of COVID-19 and providing real-time advice across industry sectors, drawing on the firm’s capabilities in crisis management, employment law, insurance recovery, real estate, supply chain management, cybersecurity, corporate and contracts law and other areas to provide critical guidance to clients in an urgent and quickly evolving situation. For more thought leadership on this rapidly developing topic, please visit our COVID-19 (Coronavirus) Resource Center.


Note that the Articles will govern the process for postponement, and assuming the Articles do not provide otherwise, there are no statutory minimum AGM notice requirements for postponed meetings, though 21 clear days’ notice is considered good practice.

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