The COVID-19 lockdown in the UK has made remote working the norm and unnecessary travel and gatherings of people illegal, thereby affecting a company’s ability to hold the meetings it would otherwise typically hold. Virtual meetings are now far more common in the current COVID-19 climate.
Is it a legal requirement for a private limited company to hold either a board meeting or a general meeting of its shareholders? Note that the rules for public companies vary.
There is no legal requirement specifying a minimum number of board meetings required in the running of a private limited company. Directors must meet sufficiently often to ensure that they are discharging their duties as directors (this can be through informal means).
The Companies Act 2006 removed the requirement for annual general meetings; however, the Company’s Articles of Association should be consulted as this may dictate that a general meeting must be held; superseding any statutory position. Furthermore, it should be noted that the Business Secretary, on 28 March 2020, announced that the Government will introduce legislation to ensure that companies which are required to hold AGMs, will be able to do so online or are able to postpone the same. Written resolutions may be a good alternative to holding a general meeting.
Once it is determined whether a meeting must be (or is wished to be) held, can this meeting be effectively held, and with legal standing by virtual means? The Companies Act 2006 generally allows for e-communication, and expressly allows general meetings to take place virtually (section 360A). Again, the Company’s Articles of Association should be reviewed for any provisions relating to telephone or video conferencing, as these will supersede any statutory conflicts.
Operation of Virtual Meetings
Now that it has been established that virtual meetings enjoy legal validity, how should they be conducted? In light of the current COVID-19 lockdown, on 28 March 2020, The Chartered Governance Institute published an in-depth guidance note on good practice regarding the holding of virtual meetings, which can be found here, and should be consulted to ensure these meeting run as effectively as possible. As a brief overview, the guidance includes the following:
- Initial considerations;
- What should be done before the meeting;
- How should parties conduct themselves during the meeting;
- Technical considerations;
- After the meeting considerations; and
- Alternatives to meetings (including written resolutions).
Some key points to take away from this guidance note are as follows:
- The choice of the right technology is vital and should be tailored to ensure secure communication that meets the requirements of the meeting: would be it beneficial to the outcome of the meeting for a video conference to take place, or would a simpler audio call suffice?
- Virtual meetings need to be simpler than normal face-to-face meetings to avoid complications, or use alternative methods where possible (such as written resolutions, email “meetings” delegation to a committee or subsequent ratification).
- Clear “ground rules” and instructions to access/use the technology in which the meeting is taking place should be circulated to all participants in good time prior to the meeting.
- Good boardroom practices such as, ensuring a quorum is present, taking minutes of the meeting, circulating the agenda and any papers (either in hard or soft copy) required in the meeting, and allowing the chair to run the meeting, are even more vital in a virtual meeting.