Every public company in the UK is required to publish their audited accounts with a tight timeframe – four months for Main Market companies and six months for AIM. All must hold an AGM within six months of their financial year-end. For many companies that is 31 December, meaning they have until 30 June 2020 to do this.
In light of the latest measures implemented by the UK Government in response to Covid-19 companies will need to rethink these arrangements.
On 25 March 2020 Companies House announced that companies can apply for a three month extension to their filing deadline.
In line with this, on 26 March 2020 the LSE confirmed that AIM companies are now able to apply to AIM Regulation for a three month extension to their reporting deadline.
On the same day, the FCA announced that all listed companies that are required to comply with DTR 4.1 will be granted temporary relief, permitting them an additional two months to publish their financial statements.
On 16 March 2020 the Quoted Companies Alliance published with the support of the FRC, GC100 and Investment Association and reviewed by BEIS outlining the five options:
1. Adapt the basis on which they hold the AGM (e.g. encouraging proxy voting or arranging supplemental venues to limit numbers in one location)
2. Delay convening the AGM, if notice has not yet been issued to shareholders
3. Postpone the AGM, if permitted under the company’s articles of association
4. Adjourn the AGM
5. Conduct a hybrid AGM, if permitted under the company’s articles of association
Since publication of the guidance note, the government’s stricter measures mean that options 1 and 5 above are no longer viable; each would require a physical venue to be made available to shareholders, attendance at which would fall foul of social-distancing measures.
AGMs – are there options available?
Virtual Meetings – these are not strictly valid under English law. The London Stock Exchange Group has reportedly asked BEIS to pass emergency legislation to make virtual AGMs expressly permissible.
Delaying the AGM – pending any emergency legislation being implemented by the UK Government, companies that have not yet sent out notices of their AGMs to shareholders would be well advised to delay convening their AGMs until further clarity has been provided. AGMs can be called on 21 clear days’ notice (unless a longer period is prescribed in the company’s articles of association), meaning that meetings can be convened relatively quickly once the restrictions have eased.
Companies delaying their AGMs will need to consider all of the implications:
- an update announcement to the market should be made if the time and date of the AGM have already been publicised;
- the expiry date of any standing authorities passed at the last AGM should be checked;
- if delaying the AGM would result in final dividend payments being made after the expected date, it may be appropriate to consider the payment of an interim dividend in lieu.
Postponement and adjournment
Companies that have already sent AGM notices can postpone or adjourn, subject to their Articles of Association. However, at present, any postponed or adjourned meeting would still need to be held within six months of the financial year-end.
If you would like to discuss these issues further, please contact Daniel Bellau.
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