Calls for law change to allow virtual AGMs
It is the time of the year when many companies are due to hold their Annual General Meetings, however, because of the Covid-19 crisis, and social distancing requirements, many AGMs have been rescheduled or postponed.
Companies have found their firms in a Catch 22 situation – A company must have a physical AGM in order to change its constitution to allow virtual AGMs.
The Institute of Directors in Ireland says the vast majority of business leaders say Company Law should be amended temporarily to allow virtual AGMs.
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.
Maura Quinn is Chief Executive of the Institute of Directors in Ireland.
“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,” she said. “With many companies required to hold an AGM, IoD’s 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.”
She said given that the 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.”
Ms Quinn said a key finding of the 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.”
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