90% of business leaders want law amended to allow virtual AGMs during crisis
The Institute of Directors (IoD) in Ireland has called upon the Department for Business, Enterprise, and Innovation and the Office of the Director of Corporate Enforcement (ODCE) to recognise the difficulties which many businesses and directors are facing during the COVID-19 crisis when trying to comply with the Company Law requirements regarding the holding of AGMs.
A new snap poll conducted by IoD Ireland has found that 90% of business leaders say Company Law should be amended temporarily during the COVID-19 crisis to allow virtual AGMs to be held without the need for a company to amend its Constitution. The survey was conducted between Friday, 24th and Monday, 27th April amongst the IoD’s 3,000 members, comprising CEOs and company directors.
Holding an AGM is essential for many companies in terms of meeting their governance responsibilities as well as complying with the regulations under Company Law. Holding an AGM provides accountability to shareholders and allows for the approval of the annual accounts in addition to meeting other requirements.
However, holding physical AGMs has proven very difficult during the COVID-19 crisis due to government restrictions and public health concerns. Irish Company Law does provide for virtual AGMs to take place, but this is precluded for many companies in their Constitution and cannot therefore be amended except at an AGM.
Maura Quinn, Chief Executive of the Institute of Directors in Ireland, said:
Directors are clearly faced with a dilemma as we enter what is widely regarded as AGM ‘season’ for many organisations, and they would like a resolution. With many companies required to hold an AGM, IoD latest research shows that over one in five of businesses are postponing or rescheduling their AGMs in the hope that they can have a physical AGM within the 15-month timeline provided for under the Companies Act 2014. Given that our survey has found that 29% of business leaders say their company’s Constitution does not allow/provide for them holding a virtual AGM, this means a lot of organisations are going to run out of road if physical distancing measures continue.
In a sense it’s a chicken and egg situation, because companies themselves cannot amend their Constitution to allow for virtual AGMs, without having an AGM or EGM. A key finding of our snap poll is that an overwhelming majority of business leaders say Company Law should be amended temporarily to allow virtual AGMs to be held without the need for a company to amend its Constitution. For this reason, we have raised this crucial issue in letters to the Department for Business, Enterprise, and Innovation, and the Office of the Director of Corporate Enforcement.
The key findings of the IoD AGM Snap Poll include:
- AGM status: 86% of business leaders say their organisation is required to hold an AGM. 96% of business leaders are aware that, under the Companies Act 2014, they must hold an AGM where applicable within 15 months of the previous AGM date.
- 2020 AGM delays due to COVID-19:
- 21% of business leaders say their organisation has postponed or rescheduled their 2020 AGM due to COVID-19.
- 65% of business leaders say their 2020 AGM was already planned to take place later in the year.
- 13% of business leaders say their 2020 AGM has already been held.
- Virtual AGMs: 29% of business leaders say their company’s Constitution does not allow/provide for them holding a virtual AGM, while 39% are not sure. 32% of respondents say their company’s Constitution does allow/provide for them holding a virtual AGM.
- Virtual AGMs and the law: 90% of business leaders say Company Law should be amended temporarily to allow virtual AGMs to be held without the need for a company to amend its Constitution. Just 5% say it should not, while 5% say they ‘Don’t know’.
- Annual Returns: 74% of business leaders say that Company Law should be reviewed in relation to the NARD (Next Annual Return Date) during this crisis to enable directors to make proper Annual Returns on time.
When asked, ‘If you cannot hold a virtual AGM, what do you plan to do?, the responses included:
- 24% say they will seek legal advice as to their AGM options.
- 23% will reschedule their AGM to within the legally permitted 15-month limit in the hope that they can then hold a physical AGM.
- 14% say they are able to hold a physical AGM.