The Holding of Company Meetings During COVID-19 Outbreak
As a result of The Disaster Risk Management (Enforcement Measures) (No 2) Order, 2020 (“the Order”) effective as of March 25, 2020, certain measures were set out by the Prime Minister for removing or otherwise guarding against or mitigating the threat, or effects, of the COVID-19 virus and the possible consequences thereof. The measures include that for the period from March 25, 2020, to April 7, 2020, gatherings in any public place shall not exceed 10 persons at a time, and each person at such a gathering shall maintain a distance of 3 feet from other persons. There are exceptions listed in the Order which may generally be described as those related to services considered to be essential.
Annual General Meetings
A company incorporated under the Companies Act has up to 15 months from the date of its last Annual General Meeting (AGM) to convene its next AGM. In the case of the first AGM, that meeting must be held within 18 months of its incorporation.
In the case of companies listed on the Jamaica Stock Exchange (JSE) the JSE has responded to the requests of members for guidance on holding AGMs in light of the risks posed by the COVID-19 virus. (https://www.jamstockex.com/holding-of-agms-during-covid-19-outbreak/)
The JSE has pointed out that while the Companies Act, Section 141, provides guidance for directors to participate in meetings by electronic means, there are no parallel provisions for shareholders meetings. It is unlikely, though not impossible, that a company’s Articles would have contemplated circumstances such as a global pandemic like COVID-19.
If an AGM is not held in the periods as required the responsible Minister may, on the application of any member of the company, call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as he may think expedient, including directions modifying or supplementing, in relation to the calling, holding and conducting of the meeting, the operation of the company's articles. The directions may include that one member of the company present in person or by proxy shall be deemed to constitute a meeting. The JSE has advised that in extreme circumstances, the Court’s power in accordance with the Companies Act could be invoked to order that an AGM be called in such a manner that the Court thinks fit.
Several companies have opted to utilize the option, where that is open to them, to postpone the AGM.
In the event that a notice of an AGM has already been circulated and a meeting called, and it is not possible to postpone or cancel the meeting, the meeting will need to be held. It may be possible to open the meeting (with the minimum quorum and in compliance with any directives issued by the Prime Minister or otherwise by applicable law) and then adjourn it to a later date in accordance with the Companies Act and the company’s Articles. If there is not a sufficient quorum within half an hour of when the meeting is due to start, the Chairman must adjourn the meeting.
The Government’s directives and the guidelines issued by the Ministry of Health and Wellness regarding social distancing and generally advising against large public gatherings, seem to be reasonable grounds on which a Chairman may adjourn a meeting on the basis that it is necessary to protect the safety of persons who would be expected to attend. However, the current circumstances have no precedent and so there may be the risk that such an action may be challenged on the ground that the postponement was improper. In the case of listed companies, the JSE should therefore be consulted for further clarification during this period. Other companies may wish to seek legal advice.
In general, Directors’ meetings are not as regulated as general meetings so boards may, to some extent, set their own rules for meetings. Article 104 of Table A of the Companies Act, by way of example, provides that:
“The directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings, as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes, the chairman shall have a second or casting vote. A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors. It shall not be necessary to give notice of a meeting of directors to any director for the time being absent from the Island”.
A company’s Articles may also allow for written resolutions (sometimes referred to as round robin resolutions). A written resolution will allow the directors to pass a resolution without having a formal meeting. Generally, it is drafted in a way that requires the document containing the resolution to be signed by all the directors of the company confirming their approval. Provision may be made for the resolution to be signed in counterpart. A written resolution, duly made, will have the same force and effect as if it has been adopted at a meeting duly called and held.
Under the Companies Act of Jamaica, unless the Articles of a company provide otherwise, a director may if all the directors of the company consent, participate in a meeting of directors of the company or of a committee of the directors by means of such telephone or other communicating facilities as permit all persons participating in the meeting to hear each other. This requires that (1) the Articles must not prohibit the holding of meetings in this manner, (2) all the directors of the company must consent to the meeting being held in this manner and (3) the communicating facilities used must facilitate all persons participating in the meeting to hear each other.
Where the requirements above are satisfied, a director or all of them, who participate in the meeting by such means will be treated as present at the meeting, and shall count to constitute a quorum, unless the Articles provide otherwise. In this context, a board meeting may be held with everyone on the phone or may be held where one or more persons are on the call and the others join the meeting in-person. The Act also provides that the laws of Jamaica shall apply to any meeting of directors of a company incorporated in Jamaica and the meeting is deemed to take place in Jamaica. Every company must ensure that minutes of all proceedings at meetings of its directors are entered in books kept for the purpose. This will, therefore, also include minutes of meetings held using electronic means.
Directors who propose to attend a meeting electronically should ensure that they have all the necessary documents available to them to allow them to be properly informed to take part in the decision making. A director who does not do so, and votes in favour of a resolution, may be held to be in breach of his fiduciary duty. Legal commentators and judicial pronouncements have stated that at the very minimum, each participating director must hear and be heard by every other participating director for the duration of the meeting. Where a document is tabled, or the directors discuss a document’s content, in the course of the meeting, and that document is not already in the possession of every director, there must be technology by which each participating director is able to see the document’s content at the relevant point during the meeting (i.e. when it is being discussed).
From a practical standpoint, when using technology for meetings it is even more important that presentations and the discussions surrounding them are focused so that participants remain engaged and there is wide participation. Prior to the meeting, Directors should test and confirm that the technology works and familiarize themselves with its operation.
The restrictions on gatherings above a certain size, restrictions on travel and requirements for self-isolation or quarantining present challenges for an AGM. Going forward, companies are likely to consider proposing amendments to their Articles to address some of the challenges that have or will be encountered as a consequence of these restrictions. This may include looking at the quorum requirements to make it clear that members attending a meeting who are not in the same location as each other may form part of the quorum; addressing electronic participation; and even granting powers of adjournment in the event of technological breakdown or other impediments to participation.
Once we are past this crisis we will be able to assess the lessons learned during this period of disruption, some of which are likely to have forced us to improve our ‘standard’ practices and efficiency. It certainly will not be business as usual.