Council of Institutional Investors

Global Markets Updates

How different markets are responding to the Covid-19 coronavirus health emergency
The spread of the Covid-19 coronavirus is creating a worldwide public health emergency. It is also disrupting business globally. For investors and companies, this includes the timing and venue for shareholder meetings, dividend payments and regulatory filings. Below are updates on specific changes in various markets in Asia, Europe and North and South America. Contributors are members of the Global Network of Investor Associations (GNIA),[1] a coalition of investor organizations under the auspices of the International Corporate Governance Network (ICGN). CII currently co-chairs the GNIA with ICGN. Michael Herskovich, a GNIA member representative affiliated with Association Française de la Gestion Financière and BNP Parisbas, played a major role in developing this compilation of market updates. CII is grateful to ICGN for its support.


China Submitted by Nana Li, Asian Corporate Governance Association
Annual Reports disclosure: The annual reports for Chinese companies listed in China and Hong Kong are due on 31 March, while for those listed in the US the due date is 30 April. However, since most Chinese companies only reopened in early March, it will be difficult for them to meet these deadlines. For this reason, the Shanghai and Shenzhen Stock Exchanges have already extended the due date of filings under their jurisdiction by one month, to April 30. The US Securities and Exchange Commission has also issued an order granting an additional 45 days to those companies that were significantly affected by the coronavirus outbreak.

AGMs: The virus situation in China is mostly (hopefully) under control now, so the stock exchanges have not granted any particular extension for the holding of AGMs in China (mostly in March-June). However, they are encouraging shareholders to vote online. It is worth noting that AGMs in China are not well attended with only an average of 40% attendance historically (while the largest shareholder on average holds 33%) so the worry there is much less for the regulators.

Hong Kong Submitted by Nana Li, Asian Corporate Governance Association
The Hong Kong Securities and Futures Commission (SFC) and the Stock Exchange of Hong Kong (HKEX) issued a joint statement to grant an extension to May 15 for the publication of annual reports by Hong Kong-listed companies. However, companies are only eligible for this extension if they have published their preliminary results or Material Financial Information on or before 31 March 2020. The HKEX will also consider applications for a further extension on a case-by-case basis.

AGMs: In Hong Kong, the SFC and HKEX will grant extensions on a case-by-case basis.
Malaysia - Submitted by Lya Rahman, Institutional Investors Council Malaysia
The Movement Control Order (MCO) in Malaysia has entered into its 4th phase, extended for another 14 days, until 12 May 2020.

The Securities Commission of Malaysia issued a Guidance Note on Conduct of General Meetings for public-listed companies (PLCs) which clearly spelt out that only fully virtual general meetings should be conducted during the MCO period with not more than 8 people to be physically present at the broadcast venue (Chairman who can be accompanied by CEO, CFO, Co Sec, Auditors and person providing virtual support) and those present at the broadcast venue must observe social distancing guidelines.

Beyond the MCO period, companies are encouraged to continue leveraging on technology in conducting their general meetings in a manner that will encourage and enable full participation by the shareholders even from remote locations. Hybrid general meetings can only be conducted after the MCO period has ended.

Under the Practice 12.3 of the Malaysian Code on Corporate Governance, companies are encouraged to have effective, transparent and regular communication with shareholders including leveraging technology to promote shareholder participation.

Due to the uncertainty of the COVID-19 situation and the duration of the MCO period, most of the companies have yet to announce the date of their AGMs despite having published their annual reports.

Under Section 340(2) of the Companies Act 2016, companies have up to 15 months from the date of its preceding AGM to hold their AGM. However, in view of the COVID-19, the Companies Commission of Malaysia has announced that a blanket approval for extension up to 3 months shall be granted if the companies apply for extension beyond the 15 months.

Companies that have announced the date of their AGMs, either proceed with the meetings (virtual meetings during the MCO period) or postpone the meetings to a date to be determined later.

The Institutional Investors Council Malaysia (IIC) issued a media statement on its strong viewpoint calling for companies to prioritise job preservation by adopting ‘first job’ strategy to ensure business sustainability.  IIC believes that its investee companies should show their sincerity to ensure their employees are able to keep their jobs during the current challenging times caused by the COVID-19 pandemic.


Australia - Submitted by Kate Griffiths, Australian Council of Superannuation Investors-ACSI
The Australian Securities and Investments Commission (ASIC) recently released guidance to companies in relation to holding their AGMs in light of the current restrictions on gatherings over 100 people.

ASIC confirms that:
  • It will take no action if AGMs are postponed for two months (that is until end of July 2020). ASIC notes that the situation remains under review - suggesting that ASIC is prepared to extend this date if required. The “no-action” position means that ASIC will not take action against an entity with a financial year end of 31 December 2019 who fails to comply with the requirement to hold its AGM within five months of the end of its financial year (provided the entity holds the AGM by 31 July 2020 or such later date as ASIC advises).
  • Where companies wish to proceed with their AGM, ASIC will support the use of appropriate technology, including a hybrid AGM (i.e. physical location and online facilities) or a virtual AGM. ASIC confirms it considers hybrid meetings to be permitted under the Corporations Act, but that hybrid meetings must also be allowed under each company's constitution. ASIC notes there is some doubt whether a virtual AGM meets the requirements of the Corporations Act and has therefore confirmed that it will take no action in relation to virtual AGMs, subject to the technology providing shareholders a reasonable opportunity to participate - which includes the ability to ask questions and vote by poll. However, as for hybrid meetings, entities will need to consider whether virtual meetings are allowable under their constitutions.
ASIC notes that companies with a 31 December balance date have the most immediate concerns, though it will continue to monitor the situation and update appropriately for those with a 31 March or 30 June balance date. An ASIC “no-action” letter does not necessarily preclude third parties (including the Office of Director of Public Prosecutions) from taking legal action.

ASIC also comments on financial reporting obligations, observing that at present, there does not appear to be widespread indications of significant issues in meeting reporting deadlines. As we progress through the year into reporting season, this may well change, given a significant amount of audit work is conducted on site.

While ASIC has confirmed its position, practice will evolve on a company by company basis, as not all company constitutions allow hybrid or virtual meetings.

Temporary relief for financially distressed businesses
The Government has announced temporary relief for financially distressed businesses, relaxing rules in relation to insolvent trading as part of its response to Covid-19. The elements of the package are:
  • A temporary increase in the threshold at which creditors can issue a statutory demand on a company (form $2,000 to $20,000) and the time companies have to respond to statutory demands they receive (from 21 days to 6 months). This is important as a statutory demand is often the first step to bankruptcy;
  • Temporary relief for directors from any personal liability for trading while insolvent. This is a cornerstone directors duty so potentially a significant development (albeit temporary); and
  • Providing the Treasurer with the power to temporarily amend provisions of the Corporations Act to provide relief from specific obligations or to modify obligations to enable compliance with legal requirements during the crisis. 
There have been calls for the Treasurer to use his new powers to provide a temporary safe harbour for companies and directors for breaches of the disclosure rules in relation to forward looking statements. ACSI does not support these proposals. 
ASX Compliance Update – capital raising rules temporarily relaxed
The ASX has released a Compliance Update that provides regulatory relief and updated guidance for application during the COVID-19 pandemic. The update covers:
  • Guidance for companies on disclosure – including disclosures on earnings guidance and decisions not to pay a dividend or distribution.
  • Trading Halts - the provision of back-to-back trading halts of up to 4 days.
  • Capital Raising Rules Relaxed - temporary emergency capital raising measures to help facilitate capital raisings in the short-term (until 31 July 2020), including an uplift (from 15 %to 25%) in placement capacity subject to a follow-on accelerated pro rata entitlement offer or SPP offer to retail investors.
  • Temporary waiver of the one-for-one cap on non-renounceable entitlement offers applicable to both to accelerated non-renounceable entitlement offers and standard non-renounceable rights issues. There is no replacement cap, but ASX reminds listed entities that they are expected to choose a ratio for their non-renounceable entitlement offer that meets their capital raising needs and that is fair and reasonable in the circumstances. 
Importantly, the ASX’s Update references the Guidance from ASIC (here) which clearly outlines that directors of listed entities must continue to act in the best interests of the entity when deciding on the timing and structuring of any capital raising. This requires directors to balance a range of considerations, such as the need for quick and certain capital, and the cost to and possible dilution of existing security holders.

ASX notes that it may withdraw the benefit of updated rules from particular entities if ASX considers it is being abused or that a listed entity is acting unfairly or unreasonably in the circumstances.

The compliance update also flags:
  • There have been examples of companies making (or attempting to make) announcements that are misleading in respect of COVID-19 (for example that they have a product that will help fight COVID-19).
  • ASX will consider reporting deadline relief on a case-by-case basis for listed entities with a 30 September, 31 December or 31 March balance date (those with a 31 May or 30 June balance date will be reviewed in due course).
  • Reporting relief for ASX/NZX dual-listed entities to facilitate the operation of the class waiver announced by the New Zealand Financial Markets Authority.


European Union - Submitted by Michael Herskovich, Association Française de la Gestion Financière
Article 8 of the 2007 Shareholder Rights Directive [2007/36/EC] requires member states to permit companies to offer participation in general meetings by electronic means and without the need to appoint a proxy that is physically present at the meeting.
Austria - Submitted by Alexander Juschus, Governance & Values
  • Possibility for shareholders to participate in a virtual general meeting from any location in real time
  • No amendment regarding meeting notification and registration deadlines
  • Limited responsibility regarding technical means of communication. The company is only responsible for issues  in its sphere of responsibility
  • Shareholders have the opportunity to speak in the meeting subject to reasonable time limits. By way of derogation, it may be provided that the submission of a motion for resolution, the casting of votes and the raising of an objection in the virtual General Meeting may only be carried out by a special proxy. In this case, the company has to provide at least four suitable independent proxies. At least two of whom must be lawyers or notaries.
Belgium - Submitted by Michael Herskovich, Association Française de la Gestion Financière
In Belgium, the AGM should still be a physical meeting within six months after the closure of the fiscal year. Companies are pushing shareholders not to attend the meetings physically.

Belgian law allows for the board to distribute an interim dividend without reference to a shareholder vote (if supported by the articles).
France - Submitted by Michael Herskovich, Association Française de la Gestion Financière
Remote attendance at French AGMs is already possible at companies where regulations allow this. An amendment is currently being presented to the French Parliament allowing all companies to hold digital meetings regardless of existing arrangements.  AGMs will take place with no public attendees and all voting will be by proxy. There will be no hybrid meetings, but most AGMs in France will be broadcast live, which was the previous practice. French companies will be allowed to hold a meeting beyond the legal requirement of six months after the start of the year (three months as extra-delay). But there is no expectation that blue chip companies will delays holding AGMs.

Measures to ensure meetings proceed will mean dividend approval is unaffected.
Germany - Submitted by Alexander Juschus, Governance & Values
The government has decided to introduce some emergency laws which contain some drastic measures:
  • The record date will be moved to 12 days prior to the meeting (instead of 21)
  • Meetings can be called 21 days ahead (instead of 30)
  • Interim reports can be shortened.
  • The supervisory board will probably receive additional competence (dividend payout without approval by AGM, Extension of Audit contracts without approval)
  • The AGM can be held online (even if the statutes say otherwise)
  • It is down to the management board to which extent questions from shareholders are allowed (e.g. The board could decide that questions have to be filed two days prior to the meeting)
  • The right to file a suit (e.g. because of technical problems) will be restricted to deliberateness      
  • Notifications to shareholders (e.g. ballot, AR) can be send 12 days before the meeting (instead of 21)
  • Aktiengesellschaften – AG (Stock Corporations) do not need to hold their meetings within the first eight months after the end of the business year
  • SEs have to hold their meetings within the first six months after the end of the business year. (It will be interesting to see how Allianz or Puma will solve this challenge)  
To draw a conclusion shareholder rights will be limited considerably. Our concern is that some issuers will use the situation to introduce some critical items. Furthermore, we are concerned to have Japanese conditions – meaning to have numerous meetings on the same day or in the same week. Given the short deadlines the situation could become extreme for asset managers. DVFA is about to publish a viewpoint.
Italy - Submitted by Massimo Menchini, Assogestioni Associazione del Risparmio Gestito
Summary: Usually, Italian companies hold AGMs within 120 days of the year-end, but the Italian Government decree—Law n. 18 of Tuesday 17th March 2020 allows AGMs to be delayed 60 days more and consequently to be held within 180 days of the year-end, instead of 120 days. The decree also permits and encourages the use of remote voting systems for both private and state-owned companies and allows meetings to be held 100% remotely. A postponement could impact the date of allocation of the profit as well as of the appointment of new boards of directors and audit committees. Nevertheless, many Italian listed companies maintained the current dates to the end of April and kept scheduled dividend payments from the end of April to the end of May.
Some of the new rules regarding AGMs envisaged in the Decree-Law n. 18 of Tuesday 17th March 2020 derogate from several articles of the legislative decree 24 February 1998, n. 58 ("Consolidated Law on Finance"), from the Civil Code and also from many companies' bylaws.
The new dispositions on the holding of AGMs are enshrined in art. 106. The main provisions of the article are:
  • Companies can hold the AGM and approve the balance sheet within 180 days (instead of 120 days) from the start of the financial year.
  • The permission of the use of remote voting systems and the validity of the vote casted electronically or by correspondence. Even if it is contrary to bylaws rules, videoconference meetings are allowed. Companies can also decide to hold a virtual-only AGM, as long as the identification of shareholders, their participation and the possibility to vote are assured. The President, the Secretary or the Notary do not have the duty to be together at the same venue.
  • Even if it is contrary to bylaws rules, listed companies pursuant to Section 135-undecies of Legislative Decree no. 58/98 can appoint a Company-Designated Proxy Holder to vote in ordinary or extraordinary meetings. The companies can decide also to authorize the participation to the AGM only through company-designated proxy holder. Voting rights holders may grant a proxy inclusive of voting instructions regarding all, or some of, the items on the agenda. Such proxies are valid only for the items for which voting instructions have been given by signing a proxy form, which may be downloaded and printed from the Company's website, the content of which is provided for pursuant to CONSOB regulations. No expenses are incurred by shareholders in granting proxies of this nature. Proxies and voting instructions sent to the Designated Proxy Holder are always revocable prior to the above-stated deadline.
  • Mutual banks, cooperative banks, cooperative societies and mutual insurance companies can also appoint the Company-Designed Proxy Holder pursuant to art. 106 derogating also from the maximum number of proxies provided by law that the Company-Designed Proxy Holder is usually entitled to receive.
  • All the provisions above-mentioned will be in effect for the AGMs held within the 31st July 2020 or in any case until the emergency state continues.
  • For State-controlled companies, the application of the aforementioned provisions enshrined in art. 106 occurs to the extent of financial resources that are already available to enforced legislation and however without new or further burdens for the public finance.
The Netherlands - Submitted by Rients Abma, Eumedion
  1. Introduction - The coronavirus (Covid-19) outbreak has also an impact on the upcoming AGMs of Dutch listed companies. 15 companies have postponed their AGM to June, others have taken restrictive measures with respect to attending the meeting. Some companies have cancelled their dividend proposal in light of the most likely impact of Covid-19 on the company’s financial position and results. Together with the Association of Dutch listed companies VEUO, the Dutch employers federation VNO-NCW and the Dutch Association of Private Investors VEB, Eumedion has pushed for emergency legislation for allowing Dutch listed companies to hold a virtual-only AGM in 2020. The Ministry of Justice and Security was willing to draft such emergency legislation and has submitted a bill to Dutch Parliament. Below a brief impression of the 2020 AGM season is presented (situation until April 8).
  2. Companies that have postponed their AGM - In total, 19 Dutch listed companies have postponed their AGM: ICT Group, Aalberts, Brill, Corbion, Boskalis, GrandVision and Ordina have decided to hold their AGM in the last week of June. Sligro Food Group has decided to move to June 9 and Ctac to June 10, while Randstad, IMCD, Flow Traders, OCI, Kendrion, Nedap, TomTom, Vastned Retail, Hydratec and Royal Porceleyne Fles have not communicated a new AGM date yet. Additionally 2 Dutch listed companies have postponed their EGMs: Esperite (from 26 March to 30 April) and Arcona Property Fund (new date not announced yet). Eumedion is concerned that an increasing number of companies will postpone their AGM until the end of June if the emergency legislation on holding virtual AGMs is not adopted quickly. In that case many institutional investors will face logistical problems if not only a large number of Dutch companies, but also other European companies have postponed their AGM to the last week of June. It might also have a negative effect on the ‘quality’ of votes cast. We therefore encourage Dutch listed companies to go ahead with the AGM as scheduled as much as possible.
  3. Companies that will still hold their AGM as scheduled - ​Most Dutch companies intend to proceed with their AGM as scheduled, but have taken precautionary measures to limit the risk of infection for all involved:
    • Almost all companies that already convened their AGM discourage their shareholders to attend the meeting in person and encourage shareholders to make use of the option to exercise their voting rights by way of electronic or written proxy. These companies further invite their shareholders to submit per e-mail questions they would have otherwise raised during the meeting in person. These questions will be dealt with and discussed during the AGM.
    • Many companies will livestream their AGM (audio broadcast or webcast), so that all shareholders can follow the meeting. Ahead of the 2020 AGM season, Eumedion already encouraged Dutch listed companies to do that.
    • Some companies ((including KPN, AkzoNobel, ABN AMRO, Heijmans, AMG and probably ASML) will conduct a so-called hybrid AGM (a combination of a physical and electronic meeting). These companies offer their shareholders to vote electronically using their smartphone, tablet, laptop or PC during the AGM (‘live voting’). However, shareholders who attend the AGM virtually will not be able to address the meeting or to ask questions during the meeting. We are a bit disappointed by that as shareholders should also have the opportunity to make a ‘live statement’ on such issues as executive remuneration or environmental or social or other controversies and to further explain their positions.
    • Until so far, only two smaller companies (Alfen and ForFarmers) offer a functionality for shareholders attending the AGM virtually to raise questions during the meeting. We very much encourage other companies to follow these examples.
    • Many companies have stated that the number of Supervisory Board members and Management Board members attending the AGM will be limited because of travel restrictions and safety procedures. We expect that at several AGMs only the chairman, the CEO, the company secretary, the notary and the person casting the proxy votes will be physically present. It is expected that contribution to the meeting by other executives and Supervisory Board members and by the auditor will be broadcasted as part of the livestream (either via pre-recorded messages or by direct participation to the livestream).
  4. Companies that already held their AGM - Despite the outbreak of the coronavirus, two Dutch listed companies held their AGMs in March as scheduled: smallcaps SnowWorld and TIE Kinetix. SnowWorld held its AGM on March 13, one day after the Dutch Government announced stringent measures to combat the coronavirus (the ‘stay at home measures’). About ten people were physically present at the SnowWorld AGM. They represented 91.1% of the issued share capital. This shareholder participation rate was hardly lower than that in 2019. At the AGM of TIE Kinetix on March 27, only the chairman of the Supervisory Board, the CEO and the company secretary were physically present. Shareholders of the software company could only participate at the AGM by telephone. They did have the opportunity to address the AGM and to ask questions during the AGM. In total 61.7% of the votes were cast. This number was even higher than in 2019 when the voter turn-out was 59.6%.
  5. Companies that have removed voting items - Until April 8, ten Dutch listed companies have removed one or more voting items from the AGM agenda. Randstad, ING Group, ABN AMRO, Intertrust, Arcadis, Royal BAM Group, Wereldhave, Heijmans, Neways and Accell Group cancelled their proposal to pay dividends. Other companies already have announced not to submit a dividend proposal to their AGM, e.g. Aegon, NN Group, Signify, Westfield Unibail Rodamco, DPA Group and Brunel Internatonal, while Core Laboratories will substantially lower its dividend pay-out. NIBC Holding will keep its dividend proposal on the AGM agenda, but has also made clear that the pay-out will be suspended until at least this Autumn. We expect more companies will follow. Next to dividends, companies also consider the sense or nonsense of share buy-back programs. Royal Dutch Shell, Arcadis and TomTom already have announced that they will suspend these programs. Eumedion understands these board decisions; in these unprecedented times, liquidity is key. At the same time, we encourage companies to also show restraint with respect to executive remuneration.
  6. Emergency legislation to allow virtual-only shareholder meetings - Together with the Association of Dutch Listed Companies VEUO, employers federation VNO-NCW and the Association of Private Investors VEB, Eumedion has advocated for emergency legislation to allow holding virtual-only AGMs in 2020. Indeed, convening a shareholder meeting while shareholders are not able to attend could lead to non-valid decision-making by the AGM. The Ministry of Justice and Safety has adopted a compromise proposal prepared by Eumedion, VEUO, VNO-NCW and VEB. In accordance with this compromise proposal, the legislator will temporarily allow a virtual-only AGM if the following conditions are met:
    1. There must be a live video or audio transmission of the entire meeting;
    2. Shareholders must be able to ask questions electronically or by post ahead of the AGM;
    3. The questions should be answered ultimately at the AGM;
    4. The company ensures that further questions can be asked electronically or otherwise during the meeting, unless this cannot reasonably be required in the light of the circumstances at that moment. The AGM Chairman has the power to assess this in the interest of a proper conduct of business at the meeting.
With respect to condition 4, the notes to the emergency legislation explain that Dutch listed companies should offer certain shareholders or representatives of shareholders the opportunity to submit further questions during the meeting via an electronic means of communication designated by the company (e.g. e-mail, chat). In any case, this requires that they submit written questions prior to the meeting. It goes without saying that the company will grant this opportunity to submit further questions to the person representing shareholders' organisations (VEB, VBDO, Eumedion), which representative may also be a member or participant of such an organisation.” This implies that Eumedion participants always have the possibility to ask follow-up questions if they are not satisfied with the board’s answers to written questions.

​It is intended that the emergency legislation will enter into force with retroactive effect from 23 March 2020.

Norway - Submitted by Michael Herskovich, Association Française de la Gestion Financière
As a default, Norwegian law requires the physical presence of shareholders or their authorized representatives in order to vote. Although digital participation is technically an option in practical terms, it might not be possible for the upcoming 2020 meetings.

Some companies have announced a postponement of AGMs via regulatory news and dividend payments are therefore delayed at these companies. One option being used by companies where meetings go ahead is to seek power of attorney over dividend payment, giving open-ended discretion to the board over the timing and the amounts.

Spain - Submitted by Michael Herskovich, Association Française de la Gestion Financière
Remote/digital meetings are possible in Spain under Spanish regulations if allowed by company bylaws and rules and regulations for the AGM. A few Spanish companies, Santander for example, already guarantee shareholders the right to participate in the meetings remotely, and to vote at AGMs without having to attend the meetings in person.

Spain has allowed meetings to be held 10 months after the end of fiscal year as long as the annual report is published.

Sweden - Submitted by Michael Herskovich, Association Française de la Gestion Financière
There is no current prohibition for private meetings that prevents general meetings from taking place and - to date - physical meetings are still going ahead, although with some adjustments.

At the Ericsson AGM, the CEO will attend remotely and shareholders can vote remotely via Euroclear. The Annual General Meeting must be held within six months of the close of the financial year. Only a shareholder meeting can authorize the payment of a dividend.

Switzerland - Submitted by Michael Herskovich, Association Française de la Gestion Financière
On 16 March, the Swiss government banned all public and private events but we understand this leaves AGMs at companies’ discretion.

The Swiss law provides only for presence-AGMs, where the shareholders must either be present in person or represented by a permitted third-party individual. AGMs via internet, paper/written AGMs (with circular resolutions) and delegate meetings are not permitted under Swiss law. Digital AGMs seem to be provided for in the future Swiss law, but it is too late to be useful for the current coronavirus situation.

So far, in Switzerland, the Board of Directors has to decide, with three variants available: the regular implementation of the AGM (perhaps by adding some obstacles to limit attendance - “AGM light”), the temporary postponement (maximum six months after the end of the FY) and the definitive cancellation of the AGM.

Shareholder approval is required for the dividend.

UK - Submitted by Michael Herskovich, Association Française de la Gestion Financière
The law allows companies to hold a virtual-only AGM, however very few companies do this – the company is bound by its articles of association. Any proposed article changes enabling virtual-only meetings are probably already too late for 2020 AGMs but a delay may be possible for companies that have not already published their notice of meeting.

The law permits AGMs to be held up to six months after the start of the financial year. Many UK companies were due to seek binding shareholder approval for the remuneration policy for the next three years at the 2020 AGM – if no such approval is possible the current policy remains in place.

UK Company Law default is to seek shareholder approval for the payment of a dividend. The law requires shareholder approval if a “final” dividend is proposed. However, many companies propose rolling quarterly dividends and do not declare a “final” dividend, which avoids shareholder approval of the distribution.

UK - Submitted by Andrew Ninian, Investment Association
The UK Company law has so far not be changed in relation to AGMs and they are progressing under existing law and company Articles of Association.
The IA supported the guidance published by the Chartered Governance Institute (ICSA) and Slaughter and May on AGMs and the impact of COVID-19. This was followed supplementary guidance on AGMs following the Government’s restrictions on large gatherings, which focus on how the AGMs can continue to progress under the Stay at Home Measures.

Members are taking a pragmatic approach and reminding companies to follow the principles of accountability and shareholder voice whilst recognising the flexibility needed in these exceptional times.

The Government announced on 28 March that it was considering how to provide additional flexibility to companies. On 17 April, BEIS and the FRC provided a Q&A with additional information regarding flexibility for company filings and other general meetings during COVID-19.

The measures, which will assist companies in meeting their statutory obligations to hold meetings and to file documentation on the Companies Register, are still being developed. There are a number of key points for listed companies to note in the meantime: 
  • BEIS envisages companies being able to hold 'closed' meetings with a number of people by way of, for example, a telephone. Such meetings will be considered quorate. In some cases, companies will have the ability to override their Articles of Association for a short period. 
  • The flexibility does not extend to virtual-only meetings. BEIS expects mandating virtual meetings would create significant further issues. 
  • Companies should continue to engage with shareholders prior to, during and following meetings and should consider holding shareholder days later in the year. Shareholders will have the ability to vote by proxy. 
  • BEIS intends to temporarily give companies the flexibility to restrict the communication of notices and other meeting documentations to electronic means. 
  • While BEIS may provide the option of an extension, it expects the vast majority of companies to hold meetings in their normal time-frame
On Financial Report, the Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) announced a series of actions which aim to "ensure information continues to flow to investors and support the continued functioning of the UK's capital markets". This included:
  • The FCA stated that it will allow listed companies an extra two months to published their audited financial reports.
  • Guidance from the FRC on preparing financial statements in this environment and from the PRA on the approach to be taken by banks, building societies and PRA-designated investment firms in assessing expected loss provisions under IFRS9.
  • Guidance from the FRC for audit firms
On Capital Raisings, the Pre-Emption Group released a statement on 1 April recommending that investors consider supporting, on a case-by-case basis, non-pre-emptive issuances of up to 20% of the issued share. Companies should still consider the views of shareholders and offer shares on a soft pre-emptive basis.

The IA supported the Pre-Emption Group’s statement and will be monitoring how companies use the additional flexibility.

The FCA published a support package for companies looking to recapitalise in light of COVID-19 on 8 April.

The package includes: 
  • Support for the Pre-Emption Group statement recommending investors support large share placings than in normal circumstances. 
  • Encouragement for companies to use the shorter form prospectuses introduced in July 2019 for secondary issuances.
  • A new allowance for companies to provide a clean (or unqualified) working capital statement alongside specific modelling assumptions to take into account the impact of coronavirus - these assumptions may only be coronavirus related.
  • Modified listing rules on request to allow issuers to undertake class 1 and related party transactions without the need to convene a General Meeting, providing they have provided a sufficient number of written undertakings from their shareholders.
  • Market Abuse Regulations remain in force and individuals privy to inside information will need to be vigilant as to what information is material to a business's prospects and in relation to market capitalisations.  
The FCA has published a technical supplement setting out the detail of the new rules.

North America

Canada - Submitted by Catherine McCall, Canadian Coalition for Good Governance
In Canada, corporations must deal with both corporate and securities law requirements when deciding to hold a meeting virtually.

Corporate law 
  • Most corporate statutes authorize virtual meetings if provided for in the by-laws of the corporation.
  • Corporations governed by the Canada Business Corporation Act and other provincial corporations such as Ontario allow for virtual meetings as long as all participants are able to participate in the meeting and communicate adequately with each other.
  • Hybrid meetings (i.e., an in-person AGM that also permits securityholder participation through electronic means), can be conducted under most corporate laws, subject to any restrictions contained in the corporation’s articles or by-laws.
  • If the articles and by-laws allow the company to hold virtual meetings, details regarding the meeting must be communicated in the proxy materials and delivered to shareholders as usual, with the caveat that disclosure relating to the new format must be added with a specific indication as to how and why holding the meeting by virtual means will not limit shareholders’ rights to participate.
  • Some large Canadian issuers in the current context (e.g., Rogers Communications, Canadian National Railway, Canadian Pacific Railway, EnWave, Fortis and Yamana Gold), have taken the fully virtual route.
  • Many Canadian issuers (e.g., including Teck Resources, TFI International, Fairfax Financial Holdings, Logistec and BluMetric Environmental), have instead decided to keep their in-person meeting with a simultaneous webcast while strongly encouraging shareholders not to physically attend the meeting and to vote in advance by proxy.
  • No Canadian issuer that we are aware of has yet adopted a hybrid format (which allows for both online and in-person voting) in response to the COVID-19 crisis.
  • In the current context, certain issuers are considering postponing their meeting altogether to a later date while they assess available options (e.g., Osisko Gold Royalties)
In addition, as boards often have the ability to unilaterally amend the corporation’s by-laws under most corporate statutes (other than in Québec), to the extent the by-laws impose significant restrictions on alternatives to in-person meetings, directors may amend the by-laws as needed, either permanently or on a “one-off” emergency basis, subject to ratification by shareholders at the next meeting. However, if the amendment is not later approved by the shareholders at the annual meeting or quorum is not met, such amendment would cease to be effective and the meeting would be held in breach of the corporation’s constating documents.

On March 31, in reaction to the COVID-19 pandemic, the Ontario government issued an Order under the Emergency Management and Civil Protection Act to allow issuers incorporated under the Business Corporations Act (Ontario) (the OBCA) to extend their AGM deadlines. Under the OBCA, corporations must hold their annual meeting within 15 months after the previous annual meeting. However, under the Order:
  • If the end of the 15 month period occurs within the period of the declared emergency, then the corporation will have 90 days after the day the emergency has been terminated to hold the annual meeting. 
  • If the end of the 15 month period occurs within the 30 days beginning on the day after the emergency is terminated, then the corporation will have 120 days after the day the emergency is terminated to hold the annual meeting.
Notably, the Order also permits corporations to hold their annual meetings electronically, even if this is prohibited by articles and bylaws.

Securities regulation
No matter the meeting format used, securities laws impose additional requirements on public issuers.
  • In response to COVID-19, the Canadian Securities Administrators have taken the relaxed position that an issuer that has already mailed and filed its proxy materials can notify shareholders of a change in the date, time, or location of its annual meeting without mailing additional proxy materials if:
    • (i) a press release announcing such change is issued,
    • (ii) the announcement is filed as definitive additional soliciting material, as the case may be, and
    • (iii) the issuer takes all reasonable steps necessary to inform other intermediaries in the proxy process of the change.
  • If a reporting issuer plans to conduct a virtual AGM or hybrid AGM and has not yet mailed its materials, they are expected to notify their securityholders, the parties involved in the proxy voting infrastructure, and other market participants of such plans in a timely manner and to disclose clear directions on the logistical details of the virtual or hybrid AGM, including how securityholders can remotely access, participate in, and vote at such AGM.
Court Orders
Alternatively, a court order may be sought. If a corporation is not permitted to hold a virtual or a hybrid meeting based on its constating documents, or if it is unclear whether the corporation is permitted to do so, for precautionary purposes it may decide to apply for a court order to ensure that the meeting is validly held. Canadian corporate statutes generally provide that a court of competent jurisdiction may order a meeting to be called, held, and conducted in the manner that the court directs.

In light of concerns over COVID-19, it is expected that the chances of success in obtaining a court order will be relatively high given that the health and safety measures would be prescribed by the authorities as extraordinary circumstances allowing courts to interfere in internal corporate affairs. On March 20, 2020, some of Canada’s biggest financial institutions and insurers (Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Canadian Western Bank, Laurentian Bank of Canada, Manulife Financial, Great-West Lifeco, Canada Life Assurance and Sun Life Financial), obtained a joint court order to hold virtual-only annual meetings in light of the COVID-19 pandemic. This creates a favorable precedent.

US - Submitted by Amy Borrus, Council of Institutional Investors
The rush to hold virtual AGMs is on. The service provider Broadridge, whose platform is used by nearly all U.S. companies that have held virtual shareholder meetings in the past, expects a big increase in virtual meetings this proxy season. Broadridge is anticipating more than 700 U.S. virtual AGMs this year, up from up from about 300 in 2019. Most U.S. companies with spring meetings are switching to virtual (no physical component) and going audio-only (no video link).

CII issued a statement March 16 that suggests that companies hold virtual-only annual meetings only when extenuating circumstances (such as the Covid-19 pandemic) warrant it. The statement also offers guidance on creating shareholder-oriented meetings under all circumstances, culled from CII’s 2017 Build a Better Meeting guide.

Separately, the SEC on March 13 issued guidance for companies on holding annual meetings in view of Covid-19 concerns. The SEC said companies that change the date, time or location of their meetings after they have mailed and filed definitive proxy materials will not have to refile or amend them so long as they announce the change in a press release, file the announcement on EDGAR (SEC electronic filing platform) and take “all reasonable steps necessary” to inform other proxy intermediaries and market participants, including the exchanges. That goes for switching to a virtual meeting, too. The SEC on March 25 gave relief to companies on requirements around physical delivery of proxy materials in areas where carrier service has been suspended due to Covid-19.

The guidance also encourages companies that go virtual to provide shareholder proponents or their representatives with the ability to present proposals via phone or other means. And, if a proponent is unable to attend the annual meeting and present the proposal because of travel or other restrictions related to the coronavirus, SEC staff will not allow a company to exclude the proposal for meetings held in the next two years, which would normally be the case under Rule 14a-h(8).

U.S. stock exchanges operate electronically. CII believes that operations have been largely smooth over the last two weeks, despite volatility and large volume, and very temporary suspensions of trading through circuit breakers (which CII does not oppose). Closing floor trading at the NYSE was a non-event, as there really is very little floor trading - the NYSE trading floor (which has closed) really functions now largely as a television studio.

South America

Brazil - Submitted by Fabio Coelho, Associação de Investidores no Mercado de Capitais
Brazilian corporate law provides only for in-person meetings. Discussions between market participants and the government on remote meetings, for the current emergency only, are ongoing, with no consensus on a particular format.
[1] The Global Network of Investor Associations (GNIA) was convened by ICGN in 2013, as an international collaboration of investor-led organizations with a common interest in promoting shareholder rights and investor responsibilities. The network enhances the capacity of national associations to share governance related priorities beyond local jurisdictions to an international audience thereby contributing to global governance reform efforts. Members are drawn from Australia, Brazil, Canada, France, Germany, Hong Kong, Italy, Malaysia, Netherlands, UK and the USA. The group is currently co-chaired by the Council of Institutional Investors in the US and ICGN.