The COVID-19 pandemic has brought with it unprecedented disruptions in the corporate world. The Government of Kenya, in a bid to combat the spread of the virus, issued directives including the imposition of restrictions on public gatherings. This essentially meant that companies are not able to conduct their Annual General Meetings (“AGMs”) in the usual manner and as required by law (except for sole member companies). Consequently, the Director General in exercise of his powers under section 876 of the Companies Act, 2015 (the “Act”) has issued Guidelines on the conduct of hybrid and virtual meetings by companies (the “Guidelines”). Below are some of the options provided under the Guidelines for companies in relation to conducting general meetings (“GMs”):
Written Resolutions in lieu of General Meetings
A private company may, subject to the provisions of the Act and its Articles of Association, pass written resolutions that are as effectual as resolutions passed at a GM. The written resolutions may be proposed by directors or members of the company. It is however important to note that a resolution to remove a director or an auditor from office before the end of their term in office, may not be passed by way of a written resolution.
Delaying or postponing of Annual General Meetings
Companies have the option of applying to the Registrar to extend the period of conducting an AGM. The Guidelines provide for the electronic submission of applications for the delay or postponement of AGMs through the email address firstname.lastname@example.org. However, the applicant company needs to consider the potential effects that a delay or postponement of an AGM might occasion to its business and the interest of its shareholders.
Conducting of Hybrid and Virtual Meetings
Companies can now conduct either hybrid or virtual meetings during the COVID-19 pandemic period if the companies’ Articles of Association allow for the same. A hybrid meeting is where the members have the optionality of either attending the meeting in person, subject to the public gathering restrictions, or doing so virtually. A virtual meeting, on the other hand, is conducted purely on an online platform without members having the option of attending the meeting physically. It is important to note that the Articles of the company have to provide for the conduct of the meetings in such a manner.
Companies that have adopted the model articles can use the appropriate technology to hold a GM at two or more venues provided that the members are provided with a reasonable opportunity to participate in the meeting. Public companies can adopt the use of virtual or hybrid meetings where: (i) their Articles permit members to attend meetings remotely; (ii) their quorum requirements for a meeting is at par or lower than the prescribed maximum number of people allowed in a public gathering per the government’s directive; and (iii) for publicly listed companies, they have to comply with the court order issued under Miscellaneous Application No E680 of 2020 on the proposed conduct of its GM and keep the Registrar in copy.
Considerations to be made before conducting a Virtual Meeting
The Guidelines require a company to put in place the following considerations before using a virtual platform to conduct meetings:
- Appropriate technology that enables both the participation and recording of attendance of members.
- Reliable technology that facilitates the communication and voting by members.
- An online voting process permitting members to cast their votes in time during the proceeding of the GM.
- Provision of proxy forms appointing the chairperson, or any other individual, to vote on a member’s behalf where a member does not have access to the internet.
- Provision of guidance to members on the requirements of participating and voting using the selected platform, the means of accessing the meeting electronically and the mode of participation.
- Prior circulation of the rules of procedure on how participants would use the selected technology including how members may provide questions or matters raised during the meeting, cut-off time for submitting questions and voting procedures.
- Implementation of a secure authentication measures to identify attendees, verify quorum of members and ensure that quorum is maintained throughout the meeting.
- Considerations of the technological implication of the selected virtual meeting platform such as user accessibility, data security, management of question and answer (Q & A) sessions, shareholder participation and voting arrangements.
In addition, companies will still be required to comply with all the other requirements of conducting meetings under the Act. These requirements include: (i) complying with the notice provisions; (ii) maintaining the quorum required for a valid meeting at the start and during the meeting; (iii) maintaining a proper record of the meeting; and (iv) for a hybrid meeting, conducting the physical meeting at the registered office of the company or a venue determined by the board and ensuring that key persons in the company attend the meeting physically to supervise compliance with the directives on public gatherings as determined by the government from time to time.
This alert is for informational purposes only. If you have any queries or need clarifications, please do not hesitate to contact Jacob Ochieng (email@example.com) (Partner), Naeem Hirani (Partner), or your usual contact at our firm, for advice relating to the Guidelines and how the same might affect you.