Board Meetings & Shareholder Meetings
In The Virtual World
As the pandemic continues to keep us in lockdown, there are many businesses trying to return to ‘business as normal’ – albeit in a new kind of normal. For many people, this means holding meetings online using software like Skype, Zoom or Microsoft Teams, with each board member or shareholder safely tucked away in their own homes. After all, directors have a duty to carry out their management responsibilities, and a pandemic doesn’t change that!
There is no doubt that these remote meeting technologies will form the foundation of a lot of meetings, both now and in the future. Being able to discuss things in a group setting while seeing everyone’s face is essential for businesses that want to keep everything operating efficiently while employees are still working from home. And if teams become permanently remote, then it will become an integral part of the work day for them.
But many business owners have some concerns about relying on these technologies. Mainly – what is their legal position in company law if they hold more formal, important meetings like board meetings or shareholder meetings using things like Zoom or Skype? Luckily, there is some pretty clear guidance available on this, so you can put your mind at ease.
Holding Board Meetings Online
The good news is that company law in England and Wales does permit directors to hold board meetings remotely through the appropriate electronic means. However, it will depend on your company’s articles of association as to whether this is allowed by your company or not. Some businesses decide early on that they don’t want any board meetings to be done electronically, in which case you have to follow your articles of association.
On the legal side of things, the key requirement is usually that the directors can hear and be heard, which means that reliable video conferencing software can be used. It should, however, be noted in the minutes of the meeting how each director is participating, and how they proved that they are who they say they are. If your articles of association haven’t been updated in a long time and you aren’t sure, it’s worth getting some legal advice first. After all, some articles require in-person only meetings, and if your business has these restrictions then you will need to amend them properly.
If you are going to hold board meetings via Zoom or Skype, a few best practices to follow include:
- Ensure all directors that are entitled to receive notice have given their express consent to the meeting being held online, and not in person.
- The solution chosen is tested beforehand to ensure all directors can hear each other clearly.
- Any voting or resolutions made during the meeting should be done one at a time, so that there is no confusion.
The minutes of the virtual meetings are still taken and circulated to each director for approval, to ensure they are correct. If you are opting to record your meetings, this does make things slightly simpler.
Holding Shareholders Meetings Online
Shareholder meetings are a slightly different kettle of fish, as physical shareholder meetings are actually not as common – especially since the requirement for private companies to hold AGM’s was removed. In bigger companies, shareholders can number in the dozens or even hundreds, so meeting in person isn’t always practical. So instead, resolutions are normally passed by written resolution, with each shareholder ‘voting’ by signing a written copy of the resolution proposed.
Understandably, holding a shareholders meeting goes against all government advice at the moment. The advice from the Chartered Governance Institute is that businesses should review their articles of association, and if there are any meetings scheduled they should be cancelled (or adjourned if notices have already been sent out).
The difficulty comes if you actually want to hold a shareholders meeting now. The law states that all shareholders should be able to actively participate in a meeting, which means they need to be able to speak, raise questions and interact in a clear and understandable way throughout the meeting. This in turn means that whatever software you choose, it needs to have these capabilities for everyone, so that each shareholder can participate. Again, we recommend you seek some legal advice here to ensure that your articles of association allow for virtual shareholder meetings, and to ensure any resolutions passed during those meetings are valid and legally binding.
If you’re not sure where you stand with holding virtual meetings, or you just want someone to look over things and make sure you’re in the clear, we’d be happy to help. Just get in touch with us on firstname.lastname@example.org or 01980 676875.