CSE offers guidance to listed firms on hosting AGMs amid COVID-19 outbreak

The Colombo Stock Exchange (CSE) yesterday provided guidance for listed companies on hosting the Annual General Meetings (AGMs), amid the coronavirus pandemic.

The CSE said the guidance offered is purely for information purposes and should be construed only as a guide. 

“It is imperative that a listed company obtain the appropriate legal advice in determining the most appropriate arrangement regarding the conduct of an AGM in the current context,” a CSE statement said.

It added that listed companies could consider the following measures/factors in this regard.

Postponement of AGM
The company could decide to postpone its scheduled/to be scheduled AGM, awaiting a more conducive environment to surface. A listed company that has already scheduled and disclosed its AGM is required to notify the CSE of its postponement. Preferably, this notice may be published in the newspapers as well. 

The payment of a final dividend, already announced by a listed company and is in requirement of the approval of its shareholders, would also be postponed accordingly. The company could also decide to pay an interim dividend, instead of the announced final dividend, provided adequate prior notice can be given to the market.  

In view of the postal disruptions, a company could choose electronic means (subject to legal advice), to serve notices and other communications regarding the AGM to its shareholders.
Any postponement of the AGM will be subject to the timelines specified in Section 133 of the Companies Act and if unable to comply, the company is advised to consult the Registrar General of Companies for further guidance.  

Virtual AGMs
The companies listed on the CSE have also been presented with the option of hosting their AGM virtually to comply with the regulatory requirements and restrictions imposed as a result of the COVID-19 pandemic. This may include electronic and teleconference mechanisms to host the AGM, such as Facebook Live, WEB Ex, Zoom and Webinar. 

A company could choose to explore this alternate avenue, unless restricted by its Articles of Association and subject to legal advice. The company may also consider the options set out in Section 144 of the Companies Act, under legal advice.

Hybrid AGMs
The guidance offered by the CSE also presents the option for a listed company to organise and host a ‘hybrid’ AGM. The meeting, which would be simultaneously held at a physical and virtual location, would enable a listed company to conduct its AGM with minimal physical presence, which would mitigate the risk factor associated with the spread of the virus. 

If the Notice of Meeting has already been dispatched to the shareholders, it may be advisable to issue a Supplementary Notice, setting out the instructions. The company is obligated to notify the CSE with regards to the decision made, which would be disseminated to the market. 

Vote by proxy
A listed company may also offer its shareholders an option to vote by proxy in the Notice of Meeting. In such instances, the shareholders could be presented with the option of authorising an independent director to attend and vote at the AGM on their behalf.

Questions by shareholders prior to AGM
A listed company may accommodate questions by its shareholders related to the business of the AGM, which could be submitted prior to the date of the AGM. Responses to these provided by the board of directors and management along with the relevant comments from the shareholders, may be included in the minutes of the AGM.

Alternative arrangements for venues to facilitate AGM
A listed company could also choose to host its AGM segregating its shareholders across a number of venues and enabling video links connecting its shareholders to the meeting. This option would reduce the numbers present at a single location, which would aid the company and its shareholders to adhere to the guidelines in relation to preventing the spread of COVID-19.

The company may be required to provide a notice of this adaptation in advance to its shareholders, specifying the numbers accommodated at a single venue and requesting shareholders to pre-register themselves or their proxies, for arrangements to be made accordingly.

Additionally, the company could also have in place temperature and health screening measures, allowing them to turn away the shareholders who fail to satisfy the health screen measures.