The Restructuring and Insolvency Reforms: What You Need to Know - AGMs and Companies House Filings

AGMs and Companies House Filings 

For some time now the Government has been promising emergency legislation to alleviate the pressure on businesses, caused by the pandemic. The Corporate Insolvency and Governance Bill (the “Bill”) sets out a number of temporary measures to assist with corporate governance during the pandemic. One of the key proposed changes relates to AGMs and Companies House filings.

• Annual General Meetings (AGMs) and General Meetings (GMs)

 What do I need to know?

The Bill has put in place temporary measures to ensure that "qualifying bodies" (including companies and charitable incorporated organisations) can hold AGMs and GMs remotely.

This provides greater flexibility and guards against a breach of a company's constitution, at a time where many companies are unable to hold AGMs and GMs as they normally would.

 Holding AGMs and GMs in a time of social distancing

The Bill temporarily allows those companies under a legal duty to hold an AGM or a GM to hold the meeting by "other means" even if their governing documents (i.e. their constitution) would not normally allow it. This means:

• Companies will now be able to hold AGMs or GMs remotely via electronic means (e.g. using platforms like Zoom or Microsoft Teams)
• Those attending the meeting will no longer need to physically meet in the same place
• Votes of the board and members may be cast electronically
• Members will not have the right to attend the meeting in person, to participate in the meeting other than by voting, or to vote by particular means.

When do these new rules come into effect and how long will they last? 

• The measures apply retrospectively from 26 March 2020
• It is envisaged that they will remain in place until 30 September 2020
• The Bill allows for the measures to be extended every three months up until 5 April 2021

What if I have already held the AGM or GM remotely? 

• As the measures apply retrospectively, if your company held an AGM or GM remotely after 26 March 2020, you will have done so in accordance with the Bill.

What if I have been unable to hold the AGM?

• There is also an extension of the period to hold AGMs. If your company is required to hold a meeting any time between 26 March 2020 and 30 September 2020, you have until the end of that period (30 September 2020) to hold your meeting

• Companies House Filings

As of 25 March 2020, to help ease the burden of Covid-19, companies were able to apply for a three  month extension to file their accounts with Companies House. This avoided companies being issued with an automatic penalty if accounts were filed late and aimed to help companies overcome the difficulties Covid-19 has placed on businesses.

At the time the Companies House Chief Executive, Louise Smyth said "[b]y easing the burden, we can help businesses through this period and enable them to thrive in the future. I would encourage companies who believe they would benefit from this new flexibility to make an application in good time."

Such applications have to be made online through a fast track system which takes just 15 minutes and will automatically be granted, if you cite issues around Covid-19.

Extension of these measures under the Bill

• The Bill gives the Secretary of State powers to extend the deadlines for filing company accounts, filing annual confirmation statements, registering a charge, notifying a change of director or PSC, changes to a limited partnership and changes to notice of membership.
• If these powers are used, the extensions will not exceed:
•  42 days where the existing period is 21 days or less
• 12 months where the existing period is three to nine months

Measures for public companies under The Bill

The Bill also extends the period for public companies to file their accounts:

• If you had to deliver the company's accounts between 25 March 2020 and 30 September 2020 then the there is a time extension to the earlier of:
• 30 September 2020 or
• the last day of the period of 12 months immediately following the end of the relevant accounting reference period

For example, if you have to file the accounts by 1 July 2020, that deadline is now extended to 30 September 2020.

• The impact of these measures on companies

Covid-19 has impacted how every company carries out its day to day business. At a time when social distancing is now the norm, it is only right that the law allows for meetings to be held remotely. The greater flexibility will undoubtedly ease the administrative burden on directors and allow a greater focus on keeping businesses afloat during these challenging times.

The measures will also be very important for companies who have had to either furlough or make redundant key employees who would normally assist with filings. Likewise, the reserved power of the Secretary of State to extend deadlines takes account of the fact that businesses will be impacted by Covid-19 in the long term.

Although in line with the Government's current time line for easing the social distancing measures, it remains to be seen whether 30 September 2020 will be too early for the measures in regards to AGMs and GMs to end.