IoD urges Government to move quickly to resolve AGMs dilemma in current crisis
The Institute of Directors (IoD) in Ireland has today urged the Government to urgently address the many issues facing companies faced with the requirement to hold AGMs during the current crisis.
These issues range from the challenges facing companies in holding physical AGMs whilst still complying with Government Health and Safety restrictions, the ability to hold virtual AGMs, and the need and importance to ensure shareholder involvement in these meetings.
The IoD recommendations not only address the provision for companies to hold virtual AGMs but IoD Ireland also believes that such Ministerial regulations should encompass:
- the conduct of such meetings, including common access to an electronic platform for all participants and advance notification thereof
- the ability to ask questions and receive answers
- that votes on all resolutions before the meeting shall be conducted on a poll.
These recommendations would ensure that shareholders have appropriate access to the AGM, which is an essential element of corporate governance.
On 29th April 2020, IoD Ireland announced that it had written to the Department for Business, Enterprise, and Innovation, and the Office of the Director of Corporate Enforcement (ODCE), calling for a recognition of, and resolution to, 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.
In its letters, the IoD also recommended that the Ministerial regulations required to make these changes should be applicable for what it termed, “the current period of uncertainty during the COVID-19 crisis”.
That IoD call came after it had published the results of a snap poll of its 3,000 members, comprising CEOs and company directors, which 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.
Maura Quinn, Chief Executive of the Institute of Directors in Ireland, said:
“There is a growing and added sense of urgency about this matter as, for many companies who have already postponed their AGMs, the clock is ticking down. Business leaders want to continue to run their businesses meeting their legal and fiduciary duties, but the current crisis has created a particular issue around the physical holding of AGMs for many and for those who cannot under their own constitution have a virtual AGM. We need a provisional solution to this during the current crisis from the Government and the Department of Business, Enterprise and Innovation, under whose aegis this falls. We believe it is appropriate to make virtual AGMs acceptable across the board for an initial period, possibly until the end of the year, at least, and their decisions and motions should be legally binding and effective, where applicable. Many companies cannot amend their Constitutions to provide for virtual AGMs without holding a physical AGM or EGM in the first instance.”
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.