Included in this update: CGI publishes further guidance on shareholder meetings; Shareholders' Rights to Voting Confirmations Regulations published; Companies House guidance on filings during COVID-19 and more...
CGI publishes further guidance on shareholder meetings
The Chartered Governance Institute (CGI) has published further guidance produced by a working party which includes the GC100, Investment Association and Quoted Companies Alliance and which is focused on shareholder meetings in light of COVID-19 and the coming into force of the Corporate Insolvency and Governance Act 2020 (CIGA).
The guidance covers various issues including:
- How companies may hold shareholder meetings in light of CIGA, including wholly or partly on a virtual basis.
- The ability to limit attendance to a minimum number of attendees until 30 September 2020 (or, if the period in which the flexibilities provided for in CIGA is extended, until the end of the extension). The guidance also states that while the recent easing of lockdown restrictions potentially makes a meeting which is physically attended by shareholders a possibility, prevailing government guidance, individual company risk assessments and the possibility of restrictions being re-imposed may lead to a conclusion that such a format is currently impractical and that, therefore, meetings should continue to proceed on a "closed" basis with the bare minimum of participants in attendance.
- The rights of shareholders which endure in light of CIGA, specifically the right to vote albeit not to choose the manner in which votes are cast.
- The ability of companies which have issued their notice to change the venue and/or format of the meeting to one permitted under CIGA.
- The extension of the deadline for holding an AGM to 30 September 2020 for those companies with a requirement to hold a meeting between 26 March 2020 and 30 September 2020.
- The application of the relevant provisions of CIGA to charities.
The guidance also acts as a reminder of the Best Practice Guidance for AGMs issued by the Department for Business, Energy and Industrial Strategy (BEIS) and the Financial Reporting Council (FRC) which contains further views on the way in which shareholders' rights might be protected in light of COVID-19.
Shareholders' Rights to Voting Confirmations Regulations published
In accordance with the amended provisions of the Shareholder Rights Directive which seek to facilitate the exercise of shareholders' rights, the Companies (Shareholders' Rights to Voting Confirmations) Regulations 2020 (Regulations) have been published and come in to force on 3 September 2020.
The Regulations amend the Companies Act 2006 (2006 Act) and create:
- in a new section 360AA of the 2006 Act, an obligation on traded companies to provide a confirmation of the receipt of a vote as soon as reasonably practicable after the vote has been received if that vote has been cast on a poll by electronic means and irrespective of whether it has been cast by a member, their proxy or corporate representative. The obligation extends to any votes cast whether at a meeting (virtual or otherwise) or in advance of such a meeting and to rights exercised by nominated persons;
- in a new section 360BA of the 2006 Act, the right for a shareholder to request information from a traded company to enable the shareholder to determine that their vote has been validly recorded and counted. Such requests must be received by the company no later than 30 days from the date of the general meeting in circumstances where the member does not have "any other reasonable means by which to determine that their vote has been validly recorded and counted by the company". If a valid request has been received, a company must provide the information as soon as reasonably practicable and in any event by the end of the period of 15 days beginning with whichever is the later of the first working day after the day on which either the result of the poll has been declared or the request has been received by the company.
For the purposes of the Regulations, the definition of a "traded company", which includes companies with securities admitted to trading on regulated markets, and therefore the main market of the London Stock Exchange, is found in section 360C of the 2006 Act; while the definition of "electronic means" is found in section 1168(4).
The Regulations mean that all relevant companies need to consider carefully how voting on matters put to shareholders after 3 September 2020 is undertaken to ensure that they, or those acting on their behalf (principally their registrars), can meet their new obligations in relation to votes submitted electronically.
FRC review of auditors' going concern policies and procedures
The FRC has published a review of the seven largest audit firms' policies and procedures in relation to going concern statements in audited financial statements in light of COVID-19.
PLSA and Investor Forum publish stewardship toolkit
The Pensions and Lifetime Savings Association (PLSA) and the Investor Forum have announced the publication of a toolkit to help pension schemes assess the effectiveness of their asset managers' delivery of stewardship.
PRA sends "Dear CEO" letter in relation to climate-related financial risk
The Deputy Governor for Prudential Regulation and CEO of the Prudential Regulation Authority (PRA), Sam Woods, has written to the CEOs of all PRA-regulated firms, setting out thematic feedback from the PRA’s review of firms’ plans relative to Supervisory Statement 3/19 while at the same time clarifying its expectations, especially as regards timing. In short, the PRA asked firms to have an implementation plan in place to manage climate-related financial risks by October 2019 and has clarified its expectation that firms should have fully embedded their approaches to managing those risks by the end of 2021. The letter reminds firms of the guidance issued by the Climate Financial Risk Forum on how to approach climate disclosure, risk management, scenario analysis and innovation; it also indicates that guidance will be published by the Bank of England in due course.
Financial Reporting Lab: reporting during the Covid-19 crisis
The Financial Reporting Lab (Lab) has published two high-level summaries of its recent work:
- a podcast which discusses its two new reports on investor disclosures during the Covid-19 crisis;
- a blog which examines the reporting expectations of investors during times of crisis.
The Lab has also issued a call for participants in relation to a new project on section 172 reporting.
Companies House guidance on filings during COVID-19
Companies House has updated its guidance on submitting forms to Companies House to reflect the fact that the latest release of the 'Upload a document' service is now live, thereby enabling a greater number of form types, constitutional documents and resolutions to be filed in this way.