The Covid-19 pandemic has brought about a shift in the way business is conducted with most businesses opting to work remotely and focusing on their online interface. The restrictions on public gatherings have also caused a dilemma for public companies that were forced to postpone their Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) up to the limits allowed by the Maltese Companies Act.
These difficulties have now been addressed through the implementation of the Companies Act (Public Companies – Annual General Meetings) Regulations, 2020, which came into force by means of Legal Notice 288 of 2020 (“the Regulations”). The Regulations now allow more flexibility to public companies with specific rules on how AGMs and EGMs may be held remotely, particularly as this was a concept that was not explicitly considered by the Companies Act.
These new Regulations have introduced a series of changes which are applicable to all public companies who are obliged to hold AGMs within the timeframe set out in the Maltese Companies Act. A list of these changes may be found below:
Holding of Annual General Meeting
Prior to the introduction of such Regulations, not more than 15 months could have elapsed between the date of one AGM of the company and that of the next. Upon the introduction of these Regulations this time limit has been extended to a period of 20 months.
Annual or Extraordinary General Meeting Held Remotely
Regardless of what may be contained in the Memorandum and Articles of the company, AGMs or EGMs may be validly held remotely subject to the following rules:
- The quorum applicable for such meetings shall remain that set out in the Memorandum and Articles of Association of the company, but the quorum may now consist of persons who are present at a meeting by proxy and no physical attendance of shareholders shall be allowed at the meeting.
- Shareholders shall only be able to appoint the Chairman of the meeting as their proxy and may indicate on the form of proxy how the Chairman as such proxy is to vote on each resolution put to the meeting.
- Sufficient time must be allowed for shareholders to ask questions which are pertinent and related to the items on the agenda of the meeting in advance, whether by electronic means or by letter addressed to the company. Such questions will be answered by the directors or by such person as the directors may delegate for that purpose.
- An invitation to ask questions shall be contained in the notice convening the general meeting and shareholders shall be allowed time to submit such questions in writing up to 48 hours prior to the meeting. The company is required to provide an answer to the questions on its website within 48 hours from the termination of the meeting. The company may provide an overall answer to questions having the same content, and it may also take reasonable measures to ensure the identification of the shareholder or the proxy.
Notice to Specify Means Used for Virtual Meetings and Procedure of Voting and Discussion
Notwithstanding the above, the Regulations permit AGMs and EGMs to be held virtually in so far as this is specifically permitted by the Articles of Association of the company. For this to be legally permissible, the means used to conduct such meeting together with the ways in which participation and discussion are to be held, including how the members can vote, must be properly laid down in the notice convening such meeting.
Proxies given by Electronic Means
It is already legally established that proxies are to be sent “in writing”. The Regulations have clarified that the term “in writing” shall also extend to proxies being given by electronic means.
Further Extension of Time Limits
The Regulations have also extended the time limit within which a public company is set to lay before and approve its accounts in the general meeting for the relevant accounting period by 5 months. In view of this extension, the period of 42 days to submit the annual accounts as laid before the company in the general meeting, the copy of the auditor’s report and the directors’ report accompanying the annual accounts shall start running from the period extended. Public companies may still avail themselves of this extension even if their Memorandum and Articles of Association specifies a shorter period. In all such cases where a public company wishes to avail itself of this extension afforded by these Regulations, a new form must be submitted to the Malta Business Registry (MBR) notifying the Registrar of the date of the AGM; this notice must be submitted to the MBR one month prior to the AGM.
As public companies are now able to shift their meetings virtually, the onus is on the company and its Company Secretary to ensure that where AGMs and EGMs are held remotely, the rights of shareholders are safeguarded, allowing only eligible shareholders the right to follow the meeting and having a secure digital voting mechanism if this is offered in lieu of voting by proxy.
Article written by Dr Sean Xerri de Caro.
Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.