Currently, physical board and shareholder meetings are not possible for most companies. Nevertheless, companies need to pass board and shareholder resolutions, particularly in respect of significant actions to address the crisis. This note sets out the options available to you to do so. The guidance is applicable to private and public limited companies, except that the written shareholder resolution procedure is only available to private limited companies.

For further information please get in touch with your usual Stephenson Harwood contact.¹  

1  Holding remote board meetings

First check your articles of association to determine whether, and if so, how board meetings can be held remotely.

Have the Model Articles or Table A been adopted in respect of board meetings?

Many companies will have adopted some or all of the provisions of the Model Articles or Table A² relating to remote meetings but may have modified them. Different Model Articles apply to private and public limited companies.

If your company has adopted the Model Articles, then your company can hold board meetings remotely, such as by telephone or video conference. The directors need to be able to communicate with each other during the meeting, but their location and the means used to communicate are not prescribed.

Table A permits directors to regulate their proceedings “as they think fit”. Our view is that it is implicit in this provision that board meetings may be conducted remotely without express permission in the articles. If it has not already done so, it is good practice for the board to agree at its first remote meeting that remote meetings are permitted and how they are to be regulated.

If some or all of your company’s directors are not located in the UK (or some or all of your company’s directors are located in the UK and ordinarily meetings would be held outside the jurisdiction), thought should be given to any tax or regulatory consequences which may arise. For example, there may be issues if the company would be deemed to be engaging in activity which is restricted or regulated in a foreign jurisdiction in which one or more director is located. Similarly it is possible that the company could find itself unintentionally falling within the jurisdiction of a different tax authority from normal. HMRC has provided guidance stating that it does not consider that a company will necessarily become tax resident in the UK because a few board meetings are held (or decisions are taken) in the UK or that a company will acquire a permanent establishment in the UK in a short period of time.  It has said that it will take the relevant facts and circumstances into account. 

The Model Articles expressly state that the directors may decide the location as being wherever any of the directors is. This is sometimes modified to be the location of the chair. If Table A applies to your company, there is no such express provision and so the directors should agree how the location of their meetings is determined.

What if the company’s articles are silent on holding board meetings remotely?

If the articles do not specify that directors must attend meetings in person, our view is that board meetings can be held remotely and it is very unlikely that the courts would not uphold an otherwise validly held meeting. If you are concerned that the directors may have exceeded their authority in holding a remote board meeting, then ratification by way of a shareholder resolution (see sections 3 and 4 below) may be required.

What if the company’s articles require a board meeting to be held in person?

The company’s articles may be amended by way of special resolution of the company’s shareholders to permit board meetings to be held remotely (see sections 3 and 4 below).

Can board meetings be held by email or by an instant messaging service?

In our view it is doubtful that a series of emails can constitute a valid board meeting as they are not conducive to contemporaneous discussion, but a written board resolution could be passed by email (see section 3 below). It is untested whether a meeting could be held by an instant messaging service but if that medium is available it is likely that oral communication methods are also available and they should be used in preference. If the directors are not all physically located in the same jurisdiction, see the discussion above regarding potential tax and/or regulatory consequences which may arise.

What practical points should be considered for remote meetings?

Many of the usual procedures at board meetings will apply to remote meetings, for example, declaring and authorising any interests of directors, but some particular considerations apply:

Before the meeting:

• Consider the means of communication. Audio only meetings may be more reliable than video meetings and more suitable for a large board.
• Check the requirements of the company’s articles as to notice. Usually, the means of communication must be specified. The process for accessing the technology to be used and the ground rules for the meeting³ should also be circulated in advance.
• Directors should receive all relevant materials before the meeting. If circulated by email then password protection is appropriate.
• Ensure IT support is accessible during the meeting.
• Consider if alternates should be appointed for directors who may be unwell or located in a jurisdiction which may result in tax or regulatory issues for your company.

During the meeting:

• A properly constituted quorum will need to remain present on the telephone or video link. All directors attending must be able to hear and be heard so that they can debate and vote on the business of the meeting.
• The meeting should be adjourned if the telephone or video link ceases to work and reconvened when working. This should be noted in the minutes.
• The chair should make use of the mute and unmute functions to ensure all directors get a say.
• If screen sharing is possible, this is a useful way of sharing the agenda and tabling documents.
• We recommend the chair asks each director in turn for their vote on a resolution to avoid any confusion or misunderstanding resulting from a show of hands over a video conference. Consider if voting software is available on the video conferencing platform.

After the meeting:

• The minutes of the meeting should be circulated to ensure they are a correct record of the business transacted and ideally the directors who were present would confirm that the minutes are accurate to avoid any confusion or misunderstanding.
• The minutes should be signed by the chairman where he is physically located. Our view is that electronic signatures of board minutes are acceptable.

2  Passing directors’ written resolutions

Directors’ written resolutions allow for board resolutions to be passed without a board meeting. Check your company’s articles permit directors’ written resolutions to be passed and, if not, modify them by special resolution of the shareholders (see sections 3 and 4 below). If your company’s articles are silent, the board can still pass written resolutions by acting unanimously.

Under the Model Articles, directors’ written resolutions must be unanimously agreed by all “eligible” directors. The eligible directors are those who would have been entitled to vote on the resolution at a board meeting (if those directors would have formed a quorum)⁴. Under Table A, all the directors entitled to receive notice of a meeting or committee of directors must agree the resolution and those directors must have been able to form a quorum had a meeting been held.

With regard to indicating agreement, it is not necessary for the directors to sign a physical or electronic copy (although this would be preferable). Assent can be given by email. If the directors do sign physical or electronic copies, then they may sign in counterparts.

3  Passing shareholders’ written resolutions

Private limited companies can pass almost all resolutions as written shareholder resolutions⁵ and this cannot be prohibited by your company’s articles. If you company has a smaller shareholder base written shareholders’ resolutions may be more practical than holding a general meeting. Note that this approach is not available to public limited companies.

Shareholders’ written resolutions may be proposed by the directors or the shareholders. They can be circulated in hard copy, by email or on your company’s website. If email or your company’s website are used, check that the relevant Companies Act 2006 provisions and the provisions of your company’s articles in respect of company communications are fulfilled. In particular, the express consent of a shareholder would be required to electronic communications and express or deemed consent of a shareholder to website communications is required.

A resolution will be passed when the requisite majority of eligible members holding voting rights (a simple majority for ordinary resolutions or not less than 75% for special resolutions) have signified their agreement to the resolution. The eligible members are those members (or their nominees) who would have been entitled to vote on the written resolution on the circulation date of the resolution. It is not necessary for all the shareholders to have voted in respect of the resolution for it to be passed but copies must be sent to each eligible member at the same time (so far as reasonably practicable) or in turn if this can be done without undue delay.

The shareholders’ written resolution must specify how the shareholders or their agents signify their agreement to it. The company must receive an authenticated document which identifies the resolution to which it relates and indicates the member’s agreement to that resolution. A member may not revoke their agreement to a resolution once given.

A signature (electronic or scanned wet ink) is not necessary; a member may return the resolution by email providing their name (provided the company has no reason to doubt the authentication and has permitted this communication method or been deemed by the Companies Act 2006 to have done so). Agreement through a website is also possible provided the requisite authentication is given and the company has permitted or been deemed to permit this means of communication (for example a unique identification code could be used).

4  Holding remote shareholder meetings

It is possible for “hybrid” shareholder general meetings to be held where a main physical meeting (which should be of the minimum number required to constitute a quorum, see section 5 below) is combined with others joining via online meeting tools, provided that your company’s articles allow.

With regard to virtual only meetings, although section 360A Companies Act 2006 is intended to support remote participation, in the past commentators have advised against such meetings on the basis that is not sufficiently certain that such meetings are valid. Certain provisions of the Companies Act 2006 present impediments, for example, such as the requirement that the notice of a meeting specifies a “place” at which the meeting is to be held. However, our view is that it is very likely that in these circumstances the courts would take a pragmatic view of such provisions⁶, especially if your company cannot achieve a quorum in one location or there are compelling reasons that the meeting is required. An alternative solution to achieve a quorum may be to find sufficient shareholders who are members of the same household.

For the reasons given above in respect of board meetings, email and instant messaging services are not advisable.

If electronic means are used to permit shareholders to participate in the meeting, they would ideally allow shareholders to both see and be seen and hear and be heard by other shareholders for the purposes of debate at both the physical and remote meetings if a hybrid approach is taken (and the company’s articles may have requirements in this respect). At the very least, the technology should permit the members to hear and be heard contemporaneously and to vote on the resolutions put to the meeting. In addition, the chair must have some means of ascertaining attendance at the meeting and be aware of what is happening across the meeting.

The technology should also be capable of being used across the various platforms shareholders may use (such as computers, tablets or phones). The technology should also be as straightforward to use as possible to avoid shareholders who are less familiar with technology being excluded.

The Model Articles permit shareholders to attend from different locations, permit members to speak and vote at meetings remotely and allow directors to choose the technology to be used. However, Table A is not conducive to remote meetings. Companies incorporating Table A in their articles should consider if it possible to amend them (private limited companies may be able to apply the written resolution procedure described in section 3 above).

For similar reasons set out in section 1 above, the directors should consider if the location of the meeting is relevant for tax or regulatory purposes.

The notice of the meeting should explain to shareholders how to attend, speak and vote at the meeting, including how to download and access any software required. It also should set out in further detail the ground rules for the meeting. For security purposes, it may be prudent to provide unique log in credentials to shareholders, if possible. An area on the company’s website should also provide details of how the members can participate in the shareholder meeting.

Questions from shareholders could be submitted in advance of the meeting via email or the website, or through an online messenger during the meeting to facilitate a more orderly remote meeting. It would also be helpful for the chair to have the ability to mute participants if required, provided this right is properly exercised.

If the technology fails and shareholders are unable to participate in the meeting, the meeting should be adjourned. It would be prudent to test the technology in advance and for the chair to have access to IT support. The chair should be aware of his powers to adjourn the meeting.

The method of voting should be considered. Electronic voting by way of a poll may be most appropriate and the online platform may facilitate this approach. It would be prudent to encourage proxy voting where possible and for proxies to be returned by email rather than in hard copy.

Note that the company’s registrar may be able to assist with the logistics of holding a remote meeting.

Note also that currently the Investment Association, ISS and PIRC each recommend against virtual only meetings. However, we expect in present circumstances this guidance may soon change.

5  Does current government guidance prohibit physical meetings?

Current government restrictions are to go outside only for food, health reasons or work (but only if you cannot work from home); all possible steps should be taken to avoid leaving the home or meeting others. Public gatherings are prohibited. The minimum number of persons required to form a quorum in one location should therefore attend any general meeting of a company (but see section 4 above for solutions if this is not possible) and the company should inform its shareholders that they may not attend in person.

6  What if no directors’ resolution or shareholders’ resolution is possible?

In such circumstances, the directors may consider taking necessary decisions and have them ratified subsequently by the shareholders. However, this is not the optimal course of action as it may expose directors to potential liability if ratification is not forthcoming.

Alternatively, the Duomatic principle of unanimous informal consent of the shareholders being binding may be applied where formal agreement to a written shareholders’ resolution may not be possible.

¹ For information regarding executing documents approved by the board, see our guidance here. ICSA has also circulated guidance on the conduct of remote board meetings, which can be found here.

² This note applies Table A as provided in the Companies (Tables A to F) Regulations 1985 as amended by Companies (Tables A to F) (Amendment) Regulations 1985. The correct version of Table A should be consulted.

³ For example, speaking in turn to avoid directors talking over each other and keeping microphones on mute when not speaking.

⁴ Note that for public companies notice of a written resolution must be given to all directors.

⁵ Written resolutions cannot be used to remove: (i) a director; or (ii) the auditors from office before the expiration of their term of office.

⁶ Virtual meetings (Jimmy Choo plc in June 2016) have also been held in the past.