Public Companies & AIM FAQs
Updated: 14:30, 30 June 2020
The Coronavirus outbreak is likely to have a significant impact on public companies and the capital markets. The UK’s capital markets operate on the basis of accurate and timely disclosure and reporting of financial and commercial information to the market. The unprecedented events over recent weeks due to the Coronavirus pandemic give rise to a number of additional challenges for public and quoted companies, over and above the general challenges they may face commercially.
This section provides a high level review of some of the specific issues and recent guidance issued in relation to public companies. For consideration of the issues relevant to private companies, see our Coronavirus FAQs on Corporate Decision Making.
The Coronavirus outbreak is likely to cause delays to reporting of financial results – what measures have been introduced to help?
- As we are entering ‘reporting season’, AIM Regulation has confirmed that AIM companies with financial year ends between 30 September 2019 and June 2020 will be able to apply for a three month extension to the reporting deadline – normally six months following year end – for the publication of their audited annual accounts. Application for such extension should be made through the company’s nominated adviser prior to the company’s current reporting deadline.
- Main Market listed companies are normally required to publish their audited financial reports within a 4 month period of the year end, however the FCA has announced that listed companies will have a 2 month extension of that deadline.
- Under legislation which came into force on 25th June, companies get more time to file accounts. The Corporate Insolvency and Governance Act (the “Act”) provides for a general extension to the filing period for public companies which are otherwise required to file their annual accounts and reports at Companies House between 26 March and 30 September 2020. No individual application is required from the company.
Market disclosures – how should AIM companies approach the uncertainties?
- Timely and accurate disclosure is a key requirement under the AIM Rules (AIM Rule 10 and 11) and all AIM companies must continue to meet their disclosure obligations without delay. Nominated advisers must maintain a sound understanding of how their AIM company clients are planning and responding to events as they unfold, so that AIM companies are able to make disclosures in accordance with their AIM Rules obligations.
- Accordingly, many AIM companies have published announcements to update the market on their trading performance and the likely impact of the Coronavirus outbreak on previously published guidance, where known at this stage.
- Where an AIM company faces material new developments as a consequence of the Coronavirus outbreak and its associated restrictions and requires more time to make full disclosures to comply with its disclosure obligations, the nominated adviser should approach AIM Regulation to discuss whether a temporary suspension of trading may be required.
How will travel restrictions and social distancing measures impact public company AGMs?
Given the requirement for social distancing and prohibition of gatherings of more than two people, companies who are required to hold annual general meetings (AGMs) will need to carefully consider alternative measures to their normal practice.
Can companies hold ‘virtual meetings’ online?
For most public companies, holding entirely ‘virtual’ meetings has generally not been feasible – due to the requirement for a quorum to be physically present and the need to ensure that participants can hear, speak and vote. However, the Act gives companies greater flexibility as to how AGMs and other meetings are held. Specifically it will temporarily allow meetings to be held by other means (for example, a “virtual” meeting with proxy or electronic voting) even if their constitution or rules would not normally allow it.
These temporary measures would apply from 26 March 2020 to 30 September 2020, with the power to extend that period by up to three months at a time (although the period cannot be extended beyond the end of the current 2020/21 financial year (5 April 2021).
If a company has not yet sent its AGM notice, can the meeting be delayed?
If a company has not yet issued its AGM notice, then delaying the meeting may be an option, as the Act also extends the period within which companies must hold an AGM. In effect, the AGM season would be extended to the end of September 2020, meaning companies could postpone their AGM beyond the current deadlines contained in legislation or their constitution and rules. Again there are powers in the Act which would allow a further extension of the period within which the AGM may be held.
What if a notice of AGM has already been sent – can the meeting be postponed?
If the AGM notice has already been issued, and the company’s articles of association permit, a company could consider postponing the AGM following the process set out in the articles. Note that the Act does not bestow any power to postpone a general meeting that has already been convened.
If postponement is not permitted under the articles of association, a company could consider adjourning the AGM. This should only be considered if the AGM notice has already been issued. Generally, in order to achieve an adjournment, a quorate meeting is required (although some companies’ articles permit adjournment for lack of quorum). If it is known that the meeting will be opened at the date and time set out in the notice with the intention of adjourning it, an announcement should be released and the website updated.
What about changing the venue of the AGM?
Changing the venue of the AGM may also be possible, although if the notice has already been issued and there is no express provision in the articles for postponing to another location, then the meeting would need to be convened at the original location and then adjourned to the new location. Where the original meeting venue is closed, then it may be possible to convene the meeting (for the purposes of adjournment) immediately outside the original venue whilst still observing social distancing measures.
What is a 'hybrid' AGM?
A hybrid AGM is a meeting where sufficient shareholders to form a quorum (normally two, one of whom is the chairman) are physically present in the same room (applying social distancing measures) with all other attendees attending ‘virtually’ and resolutions being held by way of a poll electronically, or by proxy votes cast in advance. Many companies are now proposing that such hybrid meetings are held behind closed doors with shareholders being strongly discouraged or even prohibited from attending in person.
If a hybrid meeting is planned, the company should make an announcement and then update its website, and shareholders should be made aware of how they can participate electronically and/or encouraged to cast their votes by proxy.
What changes to AGM agendas are taking place due to the Coronavirus outbreak?
As a consequence of the more limited opportunity for shareholder engagement and discussion, a number of companies have announced that the business of this year’s meetings will be strictly limited to the formal business, omitting management presentations, Q&A sessions, refreshment breaks and other business customarily conducted at the same time as the AGM. The Government expects companies to continue to engage with their members prior to, during and following meetings (including responding to shareholders’ questions sent in by electronic or other means). BEIS suggests companies should consider holding “shareholder days” later in the year (assuming the current Coronavirus restrictions are lifted) so the board can engage with shareholders.
In view of the economic uncertainty and the need to preserve cash, a number of companies have also proposed the withdrawal of proposed resolutions to approve a final dividend to shareholders.
If you would like to talk through the consequences for your business, please email us and one of our team will get in touch.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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