On 20 April 2023 CIPC issued a non-binding legal opinion on the interpretation and implication of Section 61(7) and (10) of the Companies Act, 2008, specifically on the holding of AGM’s by listed companies via electronic means. The focus was on whether listed companies can hold AGMs via electronic means and still be considered in compliance with the Act. Section 61(7) of the Act stipulates that public companies must hold an annual general meeting of shareholders at least once a year. However, with lockdown regulations and social distancing measures, companies are seeking alternative ways to hold AGMs. Section 61(10) of the Act allows for electronic participation by shareholders in any meeting of a public company, irrespective of whether the meeting is held in the Republic or elsewhere.
The non-binding legal opinion cautions companies to ensure that virtual AGMs do not infringe on shareholder rights, particularly the ability of shareholders to ask questions of the board of directors and engage in real-time with the board and each other. Companies are advised to follow best practices such as notifying shareholders as soon as possible regarding arrangements for a virtual AGM, including clear instructions in the notice on how to access the meeting, how the meeting will be conducted, how to raise questions and engage during the meeting, and how voting on resolutions will be done. Furthermore, sufficient time must be given for a meaningful question-and-answer session, during which shareholders can ask questions in real-time, engage with the board and each other, and ask follow-up questions where applicable.
In summary, while the Companies Act allows virtual AGMs, companies must ensure that such meetings comply with the Act’s requirements and enhance shareholder participation. Virtual-only AGMs that do not allow for real-time questioning without an intermediary or require all questions to be submitted in advance will not be considered an AGM for the purposes of the Act. Companies are encouraged to consider hybrid AGMs that cater to a physical meeting place and the means to access the AGM electronically or digitally.
You can read the non-binding legal opinion here.
