Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
The United Kingdom government introduced on Wednesday, May 20 the Corporate Insolvency and Governance Bill in Parliament (the Bill), which will put in place a series of measures to amend insolvency and company law to support business to address the challenges resulting from the impact of coronavirus (COVID-19).
One of the purposes of the Bill is to amend Company Law and other legislation to provide companies and other bodies with temporary easements on annual general meetings (AGM) and general meetings (GM).
The Bill temporarily allows those companies that are under a legal duty to hold an AGM or GM to hold a meeting by other means even if their constitution would not normally allow it. As a result, directors will not be exposed to liability for measures that need shareholder endorsement, and shareholders rights are preserved.
The relevant provisions relating to AGMs and GMs are:
- Meetings need not be held at any particular place;
- Meetings may be held, and votes may be cast, by electronic means or any other means specified;
- Meetings may be held without any number of those participating in the meeting being together in the same place;
- A member will not have a right to attend the meeting in person, but to participate in the meeting other than by voting, or to vote by particular means; and
- If a particular company is under a duty to hold an AGM on a certain date within the period currently set out as March 26, 2020 to September 30, 2020, they may hold it on any date that ends during the period (i.e., September 30, 2020).
A company's constitution will continue to have effect – but subject to the provisions of the Bill (once passed).
The Bill will apply retrospectively from March 26, 2020. This means that any company that has held an AGM since this date, in a way that adhered to COVID-19 social distancing measures, will have done so in accordance with the law even if it did not meet the requirements for holding such a meeting in its constitution.
The measures set out in the Bill are stated to apply until September 30, 2020, although this period may be extended (or shortened) by the Secretary of State. Any extension must be in increments of three months and cannot be extended beyond April 5, 2021.
