The government lockdown in response to Covid-19 has caused various logistical issues for everyone including companies. Many activities that a company would normally just “get on and do” as part of its usual routine are having to be adjusted. This includes the various corporate meetings, whether that is a board meeting or a meeting of the company’s shareholders, and during times when matters are so uncertain these meetings are more important than ever.
There is a fair amount of guidance available for listed companies provided by various governing bodies and governance institutions but what about those companies which are not listed?
Board Meetings
A company is managed by its directors and the directors have to be able to comply with their statutory duties under the Companies Act 2006. It is very important therefore that decisions that the directors are making are documented, especially if they are outside the normal course of business as is the case with most decisions at this current time. Getting together to hold such a meeting is of course not feasible currently so how should the company secretary and directors proceed?
Start off by reviewing the company’s articles of association and any shareholders agreement to ascertain what exactly the company’s requirements are in respect of a meeting of the board of directors. Most company’s articles provide for meetings to be able to be held virtually in some way – it is important however to ensure that all directors and officers in attendance on the call are able to hear and speak as if they were in the same room.
If a company’s articles do not specifically provide for electronic meetings are they silent (and therefore rely on the provisions of model articles or table A, as appropriate)? Or do they expressly state that a physical meeting must take place? Whatever the position is it is important that the provisions are followed and that any meeting that does take place virtually follows the same rules as any physical meeting ie, that notice is given, there is a quorum present which remains present throughout the meeting, and conflicts are declared. If for any technical reason the meeting is not quorate throughout then the meeting will need to be adjourned. Once the meeting is complete the minutes should be prepared and circulated to all the directors present to ensure that all points are covered before the minute is signed by the chairperson.
If there is no provision for virtual meetings or they are expressly excluded then the directors should propose an amendment is made to the Company’s articles so that the meetings can take place virtually.
The alternative to holding a virtual meeting would be the passing of a written resolution of the directors. Again the Company’s articles must be reviewed to ensure that such resolutions are permitted. If the articles are silent or do not contain a specific exclusion then a written resolution can be passed so long as there is unanimous agreement from the directors – the meaning of “unanimous” varies slightly between model articles and table A so ensure that you are following the correct meaning for your company’s constitution. The agreement can be given by email but best practice would be for each director to sign a physical or electronic copy of the resolutions.
The overall summary for both director and shareholder meetings is to ensure that you follow the company’s articles of association and any shareholder agreement that might be in place. Ensure that any meetings that do take place comply with the normal regulations as to notice, quorum, declarations etc, and consider whether any amendments to the company’s articles are required to ensure that they have the ability to continue to conduct business in the future should comparable events occur. If you would like further information on company shareholder meetings during the lockdown please see our article found here.
How can we help?
We advise companies on their statutory obligations and all other company and commercial law issues. For robust and strategic advice on your legal duties of directors contact the expert corporate governance team at Herrington Carmichael as early as possible.
Please contact Michelle Lamberth on 0118 977 4045.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
