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15 Jun 2020

Three things corporates need to know about the new Corporate Insolvency and Governance Bill 2019-21

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The Corporate Insolvency and Governance Bill 2019-21 (the “Bill”) published on 20 May 2020, has its third reading in the House of Lords on 23 June 2020. This briefing focuses on the proposed changes to shareholder meetings and Companies House filing deadlines. For the purposes of this briefing, the “Relevant Period” began on 26 March 2020 and ends on 30 September 2020.

1. Flexibility for holding shareholders' meetings.

  • For the duration of the Relevant Period (which period the Secretary of State may shorten or extend, provided that it may not be extended beyond 5 April 2021) the rules around shareholder meetings will be relaxed so that:

    • a meeting need not be held at any particular place;
    • the meeting may be held, and any votes may be allowed to be cast, by electronic or any other means; and
    • the meeting may take place without the need for those participating to be in the same physical location.
  • Shareholders will not have the right to attend the meeting in person, participate in the meeting other than by voting or to vote by any particular means. However, this should not be used by companies to exclude shareholders from company decision making and companies should therefore continue to think of practical ways to engage with shareholders e.g. permitting questions via video chat functions or submission of questions in advance.
  • The changes will override the company’s constitution and have retrospective effect, so that any company which has held an AGM in this way since 26 March 2020, in an effort to comply with social distancing rules, will have now done so in accordance with the law and its constitution.

2. Extension of period to hold AGMs.

  • Any company required to hold its AGM (and in relation to a public company, a general meeting at which the company’s annual accounts and reports are laid) during the Relevant Period, can now hold the meeting at any time before 30 September 2020 (again there is scope for the Secretary of State to extend this by secondary legislation).
  • These changes will allow companies who have already postponed AGMs to take advantage of the flexing of the rules for shareholder meetings (see paragraph 1 above). However, unless a company’s articles already permit it to postpone a general meeting, the Bill does not permit a company the ability to postpone a general meeting that has already been convened.
  • Public companies should be mindful of the expiry of long-stop dates on authorities granted in prior year’s AGM resolutions e.g. an authority to allot and disapplication of pre-emption rights approved in the 2019 AGM resolutions may expire before the postponed AGM is held, and the company may therefore have no valid current authority for further capital raising.

3. Temporary extension of certain Companies House filing requirements.

  • The Bill will allow the Secretary of State to extend deadlines temporarily for certain types of filings:

    • company accounts (separately, the Bill extends the filing deadline for public companies whose accounts were due between 26 March 2020 and 30 September 2020 to the earlier of 30 September 2020 or the last day of the period of 12 months immediately following the end of the public company’s relevant accounting reference period);
    • confirmation statements;
    • registration of charges; and
    • certain event driven filings (e.g. change of directors and change of registered office).
  • There are not likely to be extensions to filings that relate to a change to the share capital of the company e.g. form SH01 (return of allotment of shares).
  • Where the existing filing period is 21 days or less, the extended filing period will not exceed 42 days. Where the existing filing period is between three and nine months, the extended filing period will not exceed 12 months.

Please get in touch with our corporate team for more information on these changes and our restructuring and insolvency team for more detail on the additional changes the Bill proposes to the insolvency regime.

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Kate Hewitson

Kate Hewitson
Associate

T:  +44 20 7809 2714 M:  +44 7825 625 909 Email Kate | Vcard Office:  London