The profound impact of the measures currently in place to contain the spread of the novel coronavirus (“COVID-19”) is creating a host of issues for businesses and their employees, creating legal concerns relating to corporate governance, disclosure, contracts, financing, strategic transactions, employment and others. In the following article, we aim to provide a brief overview of things to consider in the coming days and months as travel and face-to-face meetings remain restricted.
Holding Virtual Meetings
Meetings by means of remote communication are permitted under the corporate law of most jurisdictions. However, if a company wishes to incorporate such changes it needs to consider the requirements of the jurisdiction in which it is incorporated and should check its statutory documents i.e. Certificate of Incorporation, Articles of Association or equivalent, to ensure that they do not prohibit, limit or condition shareholder meetings by remote communication.
The right choice of platform for this kind of communication is also vital. For example, unless you subscribe for a full licence with Zoom, you are limited to a maximum meeting duration of just 40 minutes. Consideration should also be given to how participants will be able to ask questions during the meeting – is there a comments or chat section where questions can be posed? What are the logistics of accessing the meeting platform? How many people need to attend? Does the platform allow for this number of people?
With so many virtual meeting platforms available such as Microsoft Teams, GoTo, Zoom, Skype, Google Hangouts etc. we recommend that you host a trial meeting prior to holding the main one so that you can get yourselves familiar with the platform and ensure it is fit for purpose.
Changing the Meeting Date
Where possible, it is likely that most companies will try to keep to the scheduled date for their Shareholder meetings. However, if you make the decision to change a meeting date, it may trigger new notice obligations under your company’s applicable jurisdictional law, which would require an update to the company’s proxy statement and appropriate disclosure to the Shareholders. You should therefore assess appropriate adjournment and postponement procedures in order to be ready for contingencies on the annual meeting date.
Attendance
Most online meeting platforms will allow the host of a meeting (as well as its participants) to see who is attending the meeting, when they each join, leave and who is speaking at any given time. Some may also allow participants to message one another during the meeting, to mute speakers if needed and even record the whole event.
Where this is not available, the Chair or Company Secretary should to do a roll call at the start to ensure everyone is present. They should also request participants to advise if they have to leave the call (this could be by messaging the Company Secretary to avoid disrupting the meeting). All participants should attend the meeting in a quiet location so to avoid any distractions and should be on mute unless they are speaking.
At the end of the meeting, under ‘Any Other Business’, the Chair should ask participants by name if they have any other matters to raise. This will also allow the Company Secretary to check that everyone is still on the call.
Board Packs
Whilst working from home, sending out physical board packs is likely to be problematic. Emailing board packs to Directors is therefore an ideal alternative but must be done with caution. Where board packs are circulated by email, there are risks, particularly if using Directors’ personal email addresses (as may be the case with non-executive Directors), which are not linked to a secure domain or server.
You may wish to therefore provide any such Directors with a company email address – but make sure that they can access it easily. Where possible, any documents emailed to Directors should also be password-protected and the password provided in a separate email.
Keeping Board and Management Informed
In discharging their responsibilities, the Board of a Company are responsible for overseeing enterprise risk management:
- A company should ensure that their Board is sufficiently informed and engaged in relation to the risks that the company is facing in light of COVID-19. It should also understand how risks are being identified, evaluated and addressed by Management. Disclosure of the Board’s role in risk oversight is required in a company’s proxy statement.
- A company should consider implementing a periodic communications plan with the full Board, or they may designate one or more Directors to be responsible for coordinating with Management, in connection with COVID-19 related matters.
- Specific actions may require involvement and/or input from particular Board committees, such as the audit committee if the company is considering whether an update to its earnings guidance is necessary.
- Management should ensure that appropriate disclosure controls and procedures are in place so that accurate information is made available to the CEO and CFO in a timely manner.
Summary
The Covid-19 pandemic is unprecedented and changing by the day. We will, in the future days and months ahead, have to consider whether changes in behaviour caused by the pandemic will have any potential lasting effects – i.e. on employee and client behaviour and expectations. When the crisis abates, we will need to be prepared to assess our handling of the situation and identify ‘lessons learned’ and actionable ideas for improvement for the future.
