The COVID-19 pandemic has created lots of uncertainty for companies in how they should conduct their normal activities, such as holding general meetings. Typically, a general meeting must be held at a suitable venue to enable all shareholders to participate. With restrictions in place on social interaction, the practical reality for many businesses is that they cannot do this.
The Corporate Insolvency and Governance Bill 2019-21 (“the Bill”) has been published and had its first reading on 20 May 2020. It seeks to provide companies with the flexibility to comply with their legal obligations to allow them to focus on trading in the difficult climate caused by COVID-19.
Flexibility as to the manner of general meetings
The Bill allows companies to hold general meetings of shareholders through video-conferencing and allows votes to be taken electronically, and this applies regardless of what is in the company’s constitution. The Bill applies to all general meetings taking place between 26 March to September 2020.
Postponing AGMs that fall between 26 March and 30 September 2020
If a company’s AGM falls during this period, the company will be able to postpone it, until 30 September 2020.
Director liability for wrongful trading
We have previously discussed how the personal liability for directors for wrongful trading has been suspended. The Bill further confirms this position by preventing courts from declaring that the company’s directors are liable to contribute to the assets, because of wrongful trading, in the period between 1 March and 30 June (or, if later, one month after the measure comes into force).
Allowing the Secretary of State to make regulations
The Bill gives the Secretary of State power to extend deadlines for various mandatory filings at Companies House, such as annual confirmation statements, annual accounts, and the registration of charges. We will need to watch this space to see how the Secretary of States responds and if such deadlines are actually extended through the use of this power.
This area is developing rapidly; it is important to keep up to date with further developments so watch out for future issues of Essentials.