The Prescription for Annual General Meetings
Unlike other countries, Jamaica is yet to amend our laws in a clear and coherent manner to permit companies to easily hold their Annual General Meetings (AGMs) in a pandemic.
Under the Companies Act, all companies must hold an AGM no more than 15 months from the last AGM and if newly incorporated, no more than 18 months from the date of incorporation. If default is made in holding the AGM, the company and every officer is liable to a fine of up to $50,000. However currently, with few exceptions, AGMs are prohibited by the Disaster Risk Management Order (DRMO) now in force. Unless you obtain the permission of a Medical Officer (Health) based on extenuating circumstances, you will require a court order to hold your AGM. That includes completely virtual AGMs, an in-person AGM (within the stipulated gathering limit) and a hybrid AGM (with no more than 15 persons in physical attendance and others attending virtually). This also applies whether the company’s Articles of Incorporation allow electronic meetings or not. Breaching the DRMO carries a fine of up to $1M or imprisonment for up to 12 months. If you were picking your poison as to which law to break, the choice would be clear.
The requirement to obtain a court order even where the size of the gathering is smaller than 10 people (the current gathering limit) would appear to be regulatory overdose. If 10 people can meet together for the purpose of any business, once masks are worn and social distancing is observed, it hardly makes sense that the meeting cannot be an AGM without the court’s or the Medical Officer’s permission. Similarly, no public health purpose is served by forbidding a one-man company from having an AGM. While companies sit to ponder, waiting to be attended to in a manner that will truly solve the problem, they attend to themselves, by getting the court order, which itself takes time and puts additional strain on the court system.
Traditionally, shareholders’ meetings in Jamaica were held as in-person meetings. While many companies may have live-streamed their AGM, it was never the intention for that to be deemed as attendance of a shareholder, or to allow someone to vote by responding to a poll prompted on Zoom. Interestingly, case law has found that a meeting held via video-link/live stream could not have been foreseen at the time the first statutory requirements for meetings were laid down and as such the court would not now be required to hold that an electronic meeting is not within the meaning of the word “meeting” as used in the 1985 UK Companies Act, which is similar to sections of our Companies Act. Rather it proclaimed that given modern technological advancements, the same result of a face to face meeting can be achieved by electronic means. At that time, the UK Companies Act had no prohibition against electronic meetings. This court decision appears to justify any arguments for a more progressive interpretation of our existing law. This, however, does not mean that an amendment is not needed to our legislation to end all doubt for those who remain unsure. The UK has since amended its Companies Act, to provide clarity, expressly allowing the holding of electronic general meetings. To date, no amendments to our Companies Act have been tabled in Parliament for consideration.
To be clear, our Companies Act also does not expressly prohibit the holding of AGMs by electronic means and companies could always get permission from the Supreme Court to hold a meeting in any format. In that regard, any exception to the ban that requires court approval is more of a placebo than a panacea. It is urgently required that something more permanent be done. There is no doubt that shareholder’s rights can be protected with the aid of technological advancements. For example, in March of this year, the Jamaica Central Securities Depository, a subsidiary of the Jamaica Stock Exchange, launched its electronic platform to host AGMs, which is purported to be beneficial to all stakeholders.
When the surgeons decide to finally step into the operating theatre, their goal should be to allow electronic meetings, without the additional step of requiring a court order and without the need for it being in the Articles of a company. In the interim while companies wait, they may seek alternative solutions should the blanket prohibition be removed, which may include (a) encouraging shareholders to use a proxy and allowing viewing by live stream or (b) having the meeting at a tourist establishment such as a hotel, as these entities are exempted from the gathering restrictions. While these solutions may not currently be possible, let us stand by for the new prescription after the 2nd of June when this DRMO expires.
Shaniel May is an associate at Myers, Fletcher & Gordon, and is a member of the firm's Commercial Department. Shaniel may be contacted via email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.