Thursday 25 June saw the Corporate Insolvency and Governance Bill 2019-21 finally receive Royal Assent, following agreement by both the House of Commons and the House of Lords on its text. This legislation is very significant for companies and other entities that may currently be in financial difficulty in the wake of the COVID-19 crisis.
The Corporate Insolvency and Governance Act 2020 puts in place temporary changes to the law with regard to the governance and regulation of such companies and other entities. Among those provisions are powers that enable such firms to extend the period in which they hold AGMs.
What does the Act say on extending AGM periods?
Paragraph 5 of Schedule 14 of the Act allows a company or other qualifying body to extend the period during which it is required to hold an AGM that would otherwise need to be held between 26 March and 30 September 2020. The effect is that the company or qualifying body will have until the end of that period to hold the meeting.
Paragraph 5 outlines that in the event of a company or other qualifying body being subject to a duty – whether under the provisions of any enactment or its own constitution – to hold a general meeting as its AGM between 26 March and 30 September this year, such a provision is to be read as if it imposes, and always has imposed, a duty to hold the meeting by 30 September.
This provision means that firms that have postponed AGMs that were due to be held after 26 March now have a limited period in which to hold those AGMs, making the most of the new flexibilities relating to how such meetings are to be conducted, in paragraph 3 of Schedule 14.
With regard to how paragraph 5 is to be applied for a public company, the references to a duty to hold a General Meeting as its AGM are to be read as including a reference to a duty to hold an accounts meeting. This would be a General Meeting at which the company’s annual accounts and reports, within the meaning given by section 471 of the Companies Act 2006, are laid.
Powers to extend the period for qualifying bodies to hold AGMs
Also of note is paragraph 6 of Schedule 14 of the Act. It empowers the Secretary of State – or in certain cases, the Treasury, the Scottish Ministers or the Department for the Economy in Northern Ireland – to amend by regulations any provision that effectively imposes on a qualifying body the duty to hold a General Meeting as its AGM (or, in a public company’s case, an accounts meeting) during a period (the overlapping period) that overlaps to any degree with the relevant period.
The Secretary of State therefore has the power to amend such a provision so that it instead has the effect of requiring the relevant meeting to be held during a period that begins with the overlapping period, and ends with such period immediately following the end of the overlapping period, as the regulations specify.
Regulations made in accordance with this paragraph must not be used to extend the period for holding an AGM by longer than eight months, as set out in paragraph 6(4) of Schedule 14.
The reference to “any provision” in paragraph 6 is to be construed as a reference to any provision of an enactment or of the qualifying body’s own constitution or rules (which includes, in the case of a company, its articles of association).
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Whether you turn to our team here at London Registrars to seek the benefits of our expertise in the maintenance of statutory registers, assistance with your AGM, or all manner of other areas of know-how, we would be pleased to be of service.
Give our corporate governance and compliance professionals a call today on 020 7608 0011, or if the office is closed due to the team working from home, on 07415 107 436, or send us an email to discover more about how we could assist you and your organisation.