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Annual meetings and COVID-19

type
Article
author
By Institute of Directors
date
26 Mar 2020
Speech bubble

Many organisations are required to hold their annual meeting within the next few months but they have been disrupted by COVID-19. To relieve pressure on organisations at this time, we are working with the government to see what can be done to extend the annual meeting timeframe (and other procedural timeframes) for companies and not-for-profits. We will keep members updated on any developments. In the meantime, we have set out some guidance below.  

Virtual shareholder meetings

Since 2012, New Zealand companies have had the ability to conduct virtual shareholder meetings including using online voting. Providing virtual options for shareholder meetings does not change the basic shareholder meeting processes, it just provides alternative means to conduct them and more shareholders may be able to participate as a result. A hybrid between virtual and physical meetings are becoming more common in New Zealand and can enable a wider mix of shareholders to engage.

A few years ago, the proposition of virtual-only shareholder meetings was met with strong shareholder opposition in New Zealand. However, in the current climate, such meetings may be an appropriate solution. For more information, see the IoD Directors Brief Shareholder meetings in the digital age.

For most incorporated societies, their general meeting requirements are set out in their rules. Some organisations' rules will expressly cover virtual meetings and electronic voting. Other organisations' rules will not (especially if their rules haven’t been reviewed for some time), and they may also have other inflexible and unhelpful provisions for meetings in extraordinary times. It is noted that the proposed new Incorporated Societies Act will likely have considerations for electronic voting and meetings.  

Practical tips

  • Keep up-to-date: COVID-19 is an evolving space. Daily developments and updates from the government, regulators and other key stakeholders may have an impact on annual meetings and associated matters
  • And keep others up-to-date: Shareholders/members need to be fully informed about annual meetings including if there are material changes
  • Prepare contingency plans: Given the changing situation, it is prudent for organisations to have back up plans for annual meetings, for instance in terms of venues, dates, key personnel and other procedural logistics
  • Ensure participation: Whatever form the meeting takes, ensure that shareholders/members have sufficient opportunity to ask questions and to engage
  • Streamline format: The usual agenda and speeches at meetings may need to be limited to essential business and legal matters, with other matters deferred to a later date
  • Future preparation: COVID-19 disruption may have highlighted deficiencies and limitations in some organisations rules. When things settle down, organisations should review their rules to ensure they have the flexibility to hold meetings effectively if an unexpected event occurs (eg with online meetings, and flexible notice and adjournment provisions).

NZX guidance for listed companies

NZX has issued guidance noting that the NZX Listing Rules provide some flexibility in managing annual meetings including around electronic communications. It also states that “While the NZX Corporate Governance Code sets out timing considerations for sending out notices of meeting, those apply as recommendations. You are able to depart from that timing recommendation (for example, if the additional time might assist you to better assess how and when you might most appropriately host your annual meeting), so long as you meet your statutory timing requirements.”

Charities Services Guidance

Charities Services has provided information on COVID-19 for charities. It notes “While charities are generally required to follow their rules, we won’t take compliance action against charities that are taking practical steps to prevent the spread of COVID-19. You must prioritise taking steps to minimise social contact, even if this breaches your rules on how you should carry out your AGM or meetings.” 

Other useful guidance

In the UK, the publication AGMs and the impact of covid-19 sets out the following options:

  • Adapt the basis on which you hold the AGM
  • Delay convening the AGM, if notice has not yet been issued
  • Postpone the AGM, if permitted under the rules
  • Adjourn the AGM
  • Conduct a hybrid AGM, if permitted under the rules

While this is for UK companies, some of the general principles are relevant to New Zealand organisations.

Other relevant AGM resources at this time include COVID-19 and the impact on AGMs, NFP AGMs and Avoiding Corona Virus and Holding or not holding general meetings of members in extraordinary circumstances.

See also insights from experienced director Rick Christie CFinstD on what has worked well in his past experience with virtual board meetings.

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