COVID-19 pushes AGMs online ‘Unqualified firms’ seek Registrar-General’s approval to join

Like many recurrences, the age-old ritual of shareholders converging under one roof to approve the decisions of their board of directors will largely be absent this year due to the obvious culprit – the raging novel coronavirus disease (COVID-19).

The imposition of restrictions on social gatherings to help contain the spread of the virus means that companies have been barred from hosting their owners to the usual Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) where audited financial statements are considered and approved, dividends are approved, directors are endorsed or removed among others.

The situation has forced most companies to postpone their meetings for the year indefinitely, while others are lining up to try a new innovation – ‘AGMs online.’

The Securities and the Exchange Commission (SEC) and the Registrar- General’s Department (RGD) told the paper in separate interviews that about 10 companies had, as of May 7, requested for permission to hold their AGMs virtually.

The Access Bank Plc, which is the first company to secure an approval and to subsequently advertise an online AGM, said in the notice that its 12th AGM “will be held virtually and streamed live by video link” on May 28.

The bank has more than 2,000 shareholders.

Importance

The Director-General of the SEC, Reverend Daniel Ogbamey Tetteh, told the GRAPHIC BUSINESS on May 7 that the migration of AGMs from the traditional auditoriums to online portals to help minimise the wrath of COVID-19 on such activities was crucial for shareholders and the continuous functioning of the firms.

He said beyond approving the financial statements, such platforms would allow shareholders to approve dividends before they can be paid.

“Lack of AGM means an information gap. A delay also means that no dividend will be paid and shareholders and potential shareholders will not have the full picture about the company to be able to take decisions,” he explained.

As of May 11, about eight companies had suspended their AGMs indefinitely, citing the current ban on public gatherings as basis.

Requests for approvals

Reverend Tetteh said the Companies Code 2019, Act 992, allowed for virtual AGMs,

As a result, he said companies whose constitutions also permitted virtual AGMs had come to the commission to seek permission to hold their AGMs online.

He said those requests basically required the commission to grant them a ‘no objection’ approval for the meetings to be held.

“From SEC, we will be interested in ensuring that minority shareholders are not disallowed from participating in the meetings before we go ahead to issue the ‘no objection,” he said.

Forthcoming guidelines

The Registrar-General, Mrs Jemimah Oware, whose outfit regulates companies in the country, said the 10 companies that sought permission from the Registrar of Companies were firms whose constitutions did not allow their members to vote by proxy but required shareholders to be present in persons for the purposes of meetings.

Experts say that the requests by companies hoping to navigate could be the beginning of a virtual AGM craze in the country as the COVID-19 pandemic continuous to make physical gatherings a health risk.

Mrs Oware said her outfit was aware of the trend and had started working guidelines to govern the holding of AGMs virtually.

Although she did not say when the guidelines would be available for use, she said they would ensure that companies holding electronic meetings did not disadvantage their shareholders.