CIGA2020: Chartered Governance Institute issues new guidance

The Chartered Governance Institute has today published updated guidance on shareholder meetings under the Corporate Insolvency and Governance Act 2020, to reflect the temporary flexibility given as part of COVID-19-related allowances.

Drafted by a working party comprising professionals from the Company Law Committee of the City of London Law Society and ICSA, with the support of GC100, the Investment Association and the Quoted Companies Alliance, this latest guidance supersedes that published in March.

Peter Swabey, policy and research director at The Chartered Governance Institute said: "The guidance that we produced for listed companies earlier this year in response to the impact of COVID-19 on shareholder meetings has been updated to reflect the temporary flexibility afforded to companies and other legal entities, such as credit unions and cooperatives, holding members’ meetings on or before 30th September 2020 by the new Act. Coronavirus remains a real and present threat, so removing the requirement for a physical location and allowing companies to hold fully or partially virtual meetings (with attendance or voting occurring electronically) to keep employees, shareholders and other stakeholders safe is a sensible approach.

"It is important to note, however, that all measures are temporary, including the right of companies to suspend, for a limited period, the right of the generality of members to attend meetings. While members do not have the right to attend meetings in person, they do of course retain voting rights on resolutions put to the meeting. We would advise all companies to ensure that they have engaged appropriately with members as a matter of good governance, particularly if the Government chooses to extend this period of flexibility until 5 April 2021, which could happen were a second or even a third wave of COVID-19 to emerge.”

The Department for Business, Energy and Industrial Strategy and the Financial Reporting Council have both endorsed the guidance.

Maureen Beresford, head of corporate governance at the Financial Reporting Council said: "This helpful guidance explains how the newly passed legislation supports companies to effectively hold AGMs, whilst ensuring members safety, and the importance of good quality shareholder engagement. Effective AGMs not only enable shareholders to exercise their voting rights but to hold directors to account.

“To support good governance the FRC is undertaking a review of AGM best practice including the use of technology during the pandemic and will report on these findings later this year.”

The new guidance covers:

-How companies are able to hold shareholder meetings under the Act
-The right of companies to limit attendance at shareholder meetings
-Member rights, including voting rights and the manner in which members can vote
-Advice on whether or not the Act overrides a company’s articles of association
-Clarification on what a company which has already issued its notice of meeting is able to do in terms of changing the meeting location or date
-Clarification on whether or not the meeting provisions of the Act apply to charities
-Whether companies can hold a physical meeting.

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