On 20 May 2020, the Corporate Insolvency and Governance Bill 2019-21 was published. The aim of this Bill is to provide businesses with some flexibility to allow them to continue trading whilst fulfilling their legal obligations and managing the circumstances of Covid-19.
Whilst this is draft legislation only at this stage, the Government is keen for this to be enacted as soon as possible and so it may well be that few, if any, material changes are made in the final legislation.
This note addresses the parts of the Bill regarding company law, in particular with reference to filing requirements and holding meetings. For information on the insolvency provisions in the Bill, please refer to the Russell-Cooke Coronavirus Resource Hub for updates from our insolvency team.
At Schedule 14, the Bill addresses the conduct of meetings. This schedule applies to several bodies, including companies (within the Companies Act 2006), charities (under Charities Act 2011) and societies (within the meaning of the Co-operative and Community Benefit Societies Act 2014).
Where these bodies are required, either by statute or their own constitution (such as Articles of Association) to hold general meetings (including AGMs) or a meeting of their members/delegates, the Bill provides some flexibility to allow these meetings to be conducted whilst adhering to social distancing measures.
The Bill permits any company, charity, society or other body within the scope of the rules, which was due to hold a meeting between 26 March 2020 and 30 September 2020, to delay the meeting until the end of that period (30 September 2020). As with many of the provisions in the Bill, this would override any existing statutory or constitutional time limits.
If a meeting is held between 26 March 2020 and 30 September 2020, members of the relevant entity do not have the automatic right to:
- attend the meeting in person
- participate by a means other than voting
- vote by any particular means
Again, this applies regardless of whether there are other statutory or constitutional requirements to the contrary. It should be noted that this Bill truncates members' rights further that it was expected to. Whilst it is still prudent for members to be involved in meetings as fully as possible, the Bill makes it clear that they are only have the automatic right to be able to vote on resolutions. This may reduce the business of the meeting that needs to be addressed.
The Bill also makes a move to allow meetings to be conducted electronically. Ordinarily, there are considerable limits on a company's ability to hold general meetings virtually; at a minimum, a "hybrid" approach was necessary (with quorate members being present together at one place). The Bill temporarily overrides this, stating that the meeting may be held (and votes may be cast) electronically.
Unfortunately, the Bill does not provide guidance as to how a meeting may be conducted electronically. It is envisaged that for many companies, holding a general meeting (including an AGM) by virtual means could be difficult if they do not already have the appropriate legal and practical infrastructure in place. Whilst it is positive that companies are given this freedom, the reality of how many will be able to usefully benefit from it is unclear.
It should be remembered that these provisions are to enable flexibility; they do not prohibit conduct. Therefore, if a company, charity or society has planned a meeting whereby limited members may be physically present, some level of participation with members is catered for, and hard-copy voting procedures are being safely used, this is still perfectly acceptable. The Bill aims to make it easier for companies and other bodies to conduct their meetings in a way which is safe in the current circumstances. It may well be that there are ways to do this which do not require the use of the new provisions.
The Bill also introduces an extension of the deadline for filing company accounts. Where a company is required to file accounts after 25 March 2020 and before the "relevant day" the company has until the relevant day to file the accounts.
The relevant day for these purposes is the earliest of 30 September 2020, or last day of the period of 12 months immediately following the end of the relevant accounting reference period. This should allow some breathing space for companies who have been affected by coronavirus.
The Bill also temporarily empowers the Secretary of State to introduce extensions to the periods of certain Companies House filings. These include confirmation statements, registering a charge, and event driven changes (such as updating a PSC register). Where the filing deadline is usually 21 days or fewer, filing period may be extended up to a total of 42 days (though it may be lower). Where the usual filing period is between three and nine months, the filing period may be extended up to a maximum total of 12 months (although it may be shorter).