The 2020 AGM season was unlike any other in living memory. During that time, DWF helped many companies navigate the complexities of balancing compliance with shifting lockdown rules and the requirements of their articles of association, company law and corporate governance guidelines.
The focus now moves to the 2021 AGM season and beyond. At the time of writing, the relaxations introduced by the Corporate Insolvency and Governance Act 2020 ("CIGA") to help with shareholder meetings, only apply to meetings held on or before 30 March 2021. Most companies hold their AGM in the summer months. While the relaxations under CIGA may be extended again, companies would be well advised, if they have not already done so, to consider how they intend to hold their AGM this year and what steps they need to take to ensure that they can.
Companies should not, however, see this simply as a question of how to get through their 2021 AGM. The COVID-19 pandemic has radically shifted the way in which people work and how they communicate with each other. For example, before last year, many people would not have dreamt of using the likes of Zoom or Microsoft Teams to the extent they now do. This change in perceptions and practices provides companies with an opportunity to rethink how they operate, including how they engage with shareholders. That, coupled with the expectation on companies to do more to allow shareholder participation at AGMs this year, means it is important that companies consider this as a priority if they are to be seen as in step with the times.
In October 2020 the Financial Reporting Council (the "FRC") published Corporate Governance AGMs: An Opportunity for Change. As well as analysing how companies conducted meetings in 2020 and setting out the different options open to companies, the FRC set out a number of best practice recommendations for AGMs. The first of these recommendations was headed "Prepare Now". This is excellent advice. Changing the way in which a company engages with its shareholders (in particular, how it holds meetings) is likely to involve a significant amount of preparation including:
- changes to the articles of association;
- consulting with investors and the company's Registrar;
- deciding on the right format and analysing what technology this will require for both the company and shareholders; and
- deciding on how shareholders will vote and ask questions.
Our Equity Capital Markets team has the expertise to help you consider and choose the right option for your AGMs both for 2021 and in the future.For more information, please contact John Campion.