COVID-19: Business, but not as we know it: Board and Shareholder Meetings

COVID-19 Business, but not as we knew it

Board & Shareholder Meetings

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COVID-19 Business, but not as we knew it:

Board & Shareholder Meetings The pandemic and the associated government protective measures pose significant threats to businesses. This article examines the options available to companies in navigating some of the administrative and operational challenges of the new virtual world and how business can be transacted remotely.

Johnathan Rees Partner johnathan.rees@laytons.com +44 (0)20 7842 8000

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COVID-19 | Board & Shareholder Meetings

Board Meetings Whether a company can hold meetings of its directors remotely will depend substantially on its articles of association. Those (many) private companies which have adopted the statutory default (“model”) articles will already have the flexibility to allow directors to participate in a board meeting otherwise than by physical presence. The Model Articles permit board meetings to be held by conference or video calls or indeed any other means by which the directors can communicate with each other.

Companies whose articles of association do not include such provisions should check their articles and the options available before holding a board meeting remotely. These might include the circulation of a written resolution signed by all directors, agreeing to decisions by email (not ideal) or delegating the issue to a committee of directors formed for a particular project or purpose. Historically there have been differing views on whether directors can conduct their meetings electronically where not specifically authorised by the company’s articles of association. That said, if the directors unanimously agree then decisions may be reached using such means. It is becoming generally accepted that directors’ meetings may be conducted by telephone or other electronic link, provided the articles do not preclude it.

If a board meeting is held electronically, it is good practice to ensure that: • all directors entitled to receive notice give their express consent to the meeting being held by such means • the arrangements are such that everyone can hear everyone else • minutes are subsequently circulated to each director for approval to ensure they are agreed as a correct record of the business transacted The Chartered Governance Institute has published guidance on holding board and committee meetings by virtual means (the guidance does not cover virtual shareholder meetings) emphasising the importance of choice of technology, preparation, access instructions and “ground rules” for the meeting and where possible obtaining the views beforehand of any director who cannot attend.

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COVID-19 | Board & Shareholder Meetings

Shareholder Meetings

Written Resolutions

As with board meetings, there is nothing in the Companies Act to preclude electronic shareholder meetings. The articles should be checked to ensure that they do not restrict the holding of meetings in this way. Subject to that there is no requirement that a company’s articles must expressly permit the holding of shareholder meetings electronically. The Model Articles permit "virtual" attendance at general meetings provided that a person is able to vote (by whatever means that person communicates with the meeting).

As an alternative to holding a general meeting, the Companies Act permits directors to propose and members to circulate, written resolutions of members which are passed on reaching the relevant percentage (depending on the type of resolution).

Views differ as to whether a “virtual-only” meeting (i.e. one that is held exclusively through the use of online technology without a corresponding physical, in-person meeting) is permissible under UK company law. It may be possible depending on the availability of suitable technology - to change the meeting to a “hybrid” meeting i.e. one where an in-person or physical meeting is convened with the minimum quorum and other shareholders are permitted to participate online.

Proxies The Companies Act gives members the right to appoint a person (a proxy) to attend and vote on their behalf at a shareholders’ meeting and to exercise all or any of the member's rights to attend, speak and vote at the meeting. That statutory right overrides any contrary provision in the company's articles. The articles will usually specify how a proxy should be appointed.

If this is not possible, it may be possible to hold a telephone conference: a shareholder meeting held in several rooms connected by audio-visual links has been held to be valid.

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COVID-19 | Board & Shareholder Meetings

Expertise

Corporate & Commercial We provide a complete range of corporate and commercial advice and support for clients who extend from start-ups, individual entrepreneurs and family offices to multinational corporations.

We advise on every facet of our client’s corporate legal needs through the complete life-cycle of an enterprise, from its inception, through its growth and expansion to, perhaps, its sale or flotation on a public market.

Our teams focus on acquiring a deep understanding of the particular needs and objectives of our clients to deliver advice and outcomes that are tailored to those needs and objectives and which meet them swiftly and cost-effectively. The approach to technical problems is informed, insightful and proportionate, and we take pride in viewing problems from a fresh perspective to provide innovative solutions.

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Katherine Beasley

Rebecca Chang

Ryan D'Souza

Associate Partner katherine.beasely@laytons.com +44 (0)20 7842 8000

Solicitor rebecca-chang@laytons.com +44 (0)20 7842 8000

Solicitor-Advocate ryan.dsouza@laytons.com +44 (0)20 7842 8000

John Gavan

Miriam Giorgioni

Esther Gunaratnam

Partner john.gavan@laytons.com +44 (0)20 7842 8000

Lawyer miriam.giorgioni@laytons.com +44 (0)20 7842 8078

Partner esther.gunaratnam@laytons.com +44 (0)20 7842 8000

Dimitri Iesini

Daniel Oldfield

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Partner dimitri.iesini@laytons.com +44 (0)20 7842 8081

Partner daniel.oldfield@laytons.com +44 (0)20 7842 8037

Partner robert.macginn@laytons.com +44 (0)20 7842 8000

Katherine Martyn

Daniele Penna

Johnathan Rees

Trainee Solicitor katherine.martyn@laytons.com +44 (0)20 7842 8000

Partner daniele.penna@laytons.com +44 (0)20 7842 8053

Partner johnathan.rees@laytons.com +44 (0)20 7842 8009

Christopher Sherliker

Cameron Sunter

Liza Zucconi

Partner christopher.sherliker@laytons.com +44 (0)20 7842 8015

Partner cameron.sunter@laytons.com +44 (0)20 7842 8036

Partner liza.zucconi@laytons.com +44 (0)20 7842 8092

This information is offered on the basis that it is a general guide only and not a substitute for legal advice.

We cannot accept any responsibility for any liabilities of any kind incurred in reliance on this information.

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