Housing Associations and AGMs – after a rapid passage through Parliament The Corporate Insolvency and Governance Act 2020 comes into force today (26 June 2020) giving welcome flexibility to the holding of AGMs (indeed all shareholder meetings) until at least the end of September 2020.
In brief:
- RPs (be they Companies Act companies or Community Benefit Societies) are given statutory flexibility that will override the requirements of their Articles of Association or Rules.
- This legislation is backdated to 26 March 2020 so any shareholder meetings held between 26 March 2020 and 26 June 2020 that complied with the Act but not your constitution will be retrospectively validated.
- A virtual AGM (such as a Zoom meeting) is permitted even if your Rules require there to be a physical meeting.
- Shareholder meetings may be held with only the bare minimum of people present (virtually if you like) to form a quorum i.e. other shareholders can be refused entry.
- Even if shareholders are refused entry they must still be permitted to vote by proxy.
- AGMs may be postponed up to 30 September at the latest (at present – the legislation allows for this date to be extended).
Consideration ought to be given to shareholder engagement – might they be permitted to view the meeting over a video link even if they cannot engage with the meeting? Might they be able to submit questions in advance of the meeting to be answered at the meeting and afterwards in writing? Should there be a further physical meeting of the shareholders once circumstances allow?
In relation to the filing of your Accounts, note that Companies Act companies already have the right to apply to extend the deadline for the filing of their accounts by three months. The FCA have not, as yet, extended the seven month beyond the financial year end deadline for filing accounts of co-ops, mutuals and community benefit societies. We anticipate that this will follow as there is power within the legislation to do so. The maximum length of extension will be to the first anniversary of the accounting reference date but may be for a shorter period.
Finally, be aware that the primary purpose of the legislation has been to amend and relax certain provisions of the insolvency regime including matters such as softening the wrongful trading offence, introducing a statutory moratorium that will prevent action being taken against an insolvent company for a period of time, requiring contracting parties to continue trading with insolvent companies and severely restricting the ability to issue winding up petitions if the reason for the non-payment is COVID related. We will publish separate articles about these provisions.
Whilst we hope that the COVID-19 strictures are unique and time limited, we would suggest that it might be sensible to consider amending your Rules at your AGM to allow for virtual meetings going forward, perhaps only where circumstances don’t permit a physical meeting.
