The COVID-19 pandemic has caused havoc amongst business owners and individuals – and unfortunately it doesn’t look like it’ll be fully over any time soon. As each day unfolds, we hear new announcements and changes to legislation, and it is a particularly confusing time for those of us who run a business.
It is more important than ever that companies ensure they are complying with legislation and not doing anything that may land them into trouble with the government. Good governance is critical at the best of times, but even more so at the moment.
With that said, it is absolutely critical that reasoned decision making is recorded as normal so that the company’s Articles of Association and its other legal requirements in relation to meetings are being followed. First of all, this ensures that both directors and shareholders can formulate a clear-cut strategy to navigate through these unprecedented times. Secondly, if disaster strikes and it looks like a company may be failing, it will show that company directors were acting legally and following procedure throughout.
When would a company need to hold a shareholder meeting?
Privately held companies are under no obligation to hold an annual general meeting (AGM), so it is only a requirement if the company’s Articles of Association specific as such. If your company has a shareholder agreement in place, you should reference this to ensure you know the areas under which shareholder consent is required.
In most cases, most decisions for privately held companies can be made via written resolutions which are distributed and signed electronically, which negates the requirement for a physical meeting.
So how does a company hold a board meeting whilst respecting social distancing guidance?
This will be the most obvious question that comes to mind when considering holding a board meeting. When it comes to decision making, most companies are in the practice of using written motions which are both distributed and signed electronically.
But what about when directors wish to hold a board meeting? Fortunately, most companies are permitted to hold board meetings by telephone or video conferencing methods – your Articles of Association will specify whether your company is authorised to do this. If your Articles do not indicate whether you can hold board meetings electronically, or if they explicitly prohibit electronically held meetings, you can have the Articles amended – of course, ensuring all shareholders approve. A board meeting held via telephone or video conference is the most realistic option right now, given the current climate, so it shouldn’t be any problem getting approval to make the necessary arrangements to do this. Remember to ensure that accurate minutes are taken, which will need to be distributed for approval via email.
If you cannot hold a virtual meeting, it may be an idea to hold the meeting at one of the shareholders’ homes, with another member of their household acting as a substitute for the other shareholders in order to satisfy the requirement for a minimum number of attendees.
What’s the best way to hold a virtual meeting?
You should check your Articles of Association and any of the shareholder agreements for requirements on minimum number of attendees and voting majorities required for the specific decisions that need to be made.
We recommend telephone or video conferencing via Skype or Zoom, and we would recommend a test run-through just to ensure that all participants can hear and speak effectively at the meeting.
Of course, ensure proper minutes are taken to record proceedings and resolutions and that all participants agree. Also, you should make sure that forms are filed at Companies House and registers are updated.
If you’re not sure whether you are authorised to hold a virtual meeting or you’d like help making sense of your Articles of Association, please get in touch and we’d be more than happy to help you.
This note comprises the view of the author at the time written. This note is not a substitute for legal advice. Information may be incorrect or out of date and may not constitute a definitive or complete statement of the law or the legal market in any area. This note is not intended to constitute advice in any specific situation. You should take legal advice in specific situations. All implied warranties and conditions are excluded, to the maximum extent permitted by law.