Virtual meetings

On 20 March 2020, the UK Government published its Corporate Insolvency and Governance Bill (CIGB). The CIGB introduces both (a) permanent reforms and (b) temporary reforms specifically designed to ease the burden on companies and directors caused by the Covid-19 pandemic.

One change in the latter category facilitates the holding of meetings virtually rather than physically for the benefit of members of companies, charitable incorporated organisations, registered co-operative societies, building societies and friendly societies (a "qualifying body"). The provisions are set out in section 35 and schedule 14 to the CIGB.

There is a vast array of qualifying bodies commercial and non-commercial that have grown up over decades if not centuries representing listed and private companies, charities, sports and other amateur clubs and surely may others with a patchwork of constitutions presenting all variety of logistical difficulties in an unforeseen context of restrictions on public gatherings. Over-arching legislation intended to prevail over qualifying bodies’ own constitutions was seen to be essential.

The CIGB will apply to meetings which are held between 26 March 2020 and 30 September 2020 (referred to in CIGB as "relevant period"). The provisions will take effect retrospectively so that meetings held during this period not in compliance with a qualifying body’s constitution and thus potentially invalid will, if taking place within the wide permissive provisions of CIGB be “made good” once the CIGB enters legislation.

Schedule 14 as introduced to Parliament (which may change before enactment)  is short and sweet yet has extremely wide impact and reads as follows:

  1. Meetings of qualifying bodies held during the relevant period

(1) This paragraph applies to a meeting within sub-paragraph (2) that is held during the relevant period.

(2) A meeting is within this sub-paragraph if it is— (a) a general meeting of a qualifying body, (b) a meeting of any class of members of a qualifying body, or (c) a meeting of delegates appointed by members of a qualifying body.

(3) The meeting need not be held at any particular place.

(4) The meeting may be held, and any votes may be permitted to be cast, by electronic means or any other means.

(5) The meeting may be held without any number of those participating in the meeting being together at the same place.

(6) A member of the qualifying body does not have a right— (a) to attend the meeting in person, (b) to participate in the meeting other than by voting, or (c) to vote by particular means.

(7) The provisions of any enactment relating to meetings within sub-paragraph (2) have effect subject to this paragraph.

(8) The provisions of the constitution or rules of the qualifying body have effect subject to this paragraph.

Easing out of the lockdown presents its own questions. While holding a physical AGM may become permissible out of lockdown directors/ members may still be reluctant to meet. It is the responsibility of the qualifying body/meeting chair to ensure a safe and orderly meeting and to protect the health and safety of members and attendees.

Besides, who knows the future in terms of freedom to travel and attend public gatherings? There may be "localised lockdowns" with some companies in some geographical regions being able to hold physical meetings, and other not.

Companies and other qualifying bodies should ideally future-proof their articles of association/ constitutions to provide sufficient flexibility in the way in which they hold AGMs, whilst also reassuring members of an intention to hold physical meetings when possible. The process of amending a constitution itself requires the holding of a valid general meeting!

For some companies etc there may indeed be no going back should the virtual meeting become the preferred modus, one which through familiarity and improvement is seen to provide sufficient annual access and challenge to management from the comfort of one’s own home or office!

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