Where shareholders’ general meetings (GMs) are planned by companies to be held, consideration must be given to the spread of Covid-19.
In this article we share thoughts and suggestions under Cyprus Law.
Where the GM has not been convened, delaying of its convocation can be considered.
Where the GM was convened, then it may be possible to (a) postpone it, if permitted under the articles of association; (b) adjourn it; or (c) conduct it with electronic participation, even if the notice convening it provided for the meeting to be attended physically.
Delaying the convocation of the GM
Where the GM is an Annual General Meeting (AGM), attention must be given to the timelines provided by the Companies Law within which AGMs must be held.
Under the Companies Law, companies must hold their AGMs within eighteen months as from their incorporation and thereafter, once in every year and not later than fifteen months as from the date of the previous AGM.
Public companies should make relevant announcements to inform the market.
Private companies, may elect to inform their shareholders of the plan or intention to hold a GM and of the decision to delay the convocation. Such action may be prudent to be taken, where the shareholders were previously informed of, or they would for other reasons expect, the convocation of a GM.
Postponing the GM
If a company has issued a notice to convene a GM, it may postpone it, provided that its articles of association so permit.
The provisions in the company’s articles of association will regulate the procedure to be observed in order to postpone the GM.
The Companies Law, does not provide for time frames, or notice periods in connection to GMs which are postponed. Such matters fall to be regulated by the company’s articles.
In order to keep the interested persons informed promptly and in order to avoid complaints or challenges, companies as good practice will normally try to give notice of at least 21 days where the GM is an AGM or a meeting to consider a special resolution, and of at least 14 days for other GMs.
Adjourning the GM
Under common law, the chairman of a GM has power to adjourn it, provided that the power is used for and as it is necessary to achieve a legitimate purpose related to the transaction of business and not merely in order to prevent the meeting from passing a decision. Examples may include situations where it is necessary to re-establish order, or to facilitate conduct of the meeting.
The chairman may also adjourn a meeting in accordance with the provisions of the company’s articles of association. Often, the articles provide in what circumstances and how the chairman may adjourn the meeting and the notice that should be given for the adjourned meeting.
If the articles do include provisions for adjournment, the power to adjourn will be for the meeting (the chairman must adjourn the meeting if requested to do so by the meeting and the reason for the adjournment is for a legitimate purpose).
The Court has power, following an application to order that a GM be adjourned.
It should be noted that only the business which was to be transacted at the original meeting it is possible to be transacted at the adjourned meeting.
Conducting the GM with electronic participation
If the articles of association of a company permit, a general meeting may be participated by the shareholders electronically.
Where a company has issued a notice for the GM to be held physically only and the articles allow meetings to be held electronically, it will be possible by the giving of further notice, to change the meeting as one to be participated electronically.
If the articles of association do not permit meetings to be held electronically, shareholders may approve an amendment to the articles to permit it (for example by passing a written resolution in writing). Such an option would be more suitable for companies with a small number of shareholders.
Precautionary action advisable to be taken
Even where there is no lockdown and the meeting is not legally prohibited from being held, the company shall act prudently and take precautions for the participants’ and the community’s interest and safety.
The options described above may be used. Further precautionary actions may include encouraging proxy-voting, facilitating on-line voting, live streaming the meeting, establishing online shareholder Q&A, and/ or limiting the number of non-shareholder participants.
We would be happy to discuss with you for your company’s matters and the actions to be taken to address the situation.