The governments direction and social distancing guidance to address the increasing impact of the COVID-19 global pandemic is having a huge impact on companies who are typically busy preparing for their AGMs March to May. Flexibility measures have been announced to assist in terms of company reporting and audit considering the continuing uncertainty.

Impact on AGMs

Companies should be considering adapting the way their AGMs are held as shareholder attendance (other than as required to form a quorum) will be prohibited whist the governments stay at home measures are in force. Information should be offered around how they can remain engaged through voting by proxy and asking questions of directors.

The quorum should be able to be satisfied by two director and/or employee shareholders attending, with resolutions passed by proxy votes (or by appointing one of those employees as a corporate representative) and the votes of those in attendance. If the physical presence of more than two is required, the number should be kept to the minimum and social distancing measures should be in place.

If a meeting has already been organised for a venue that has become unavailable, they should consider postponing or moving the venue should the articles allow.

Board / Committee Meetings

Most boards are accustomed to holding meetings by conference call, but it is possible to host video meetings which are often more engaging via platforms such as Microsoft Teams or Zoom for example. The ICSA have produced some useful guidance on good practice for virtual board and committee meetings – ICSA. Articles of association should be checked for any provisions on telephone or video conferencing.

Company Reporting

Companies House announced that companies affected by COVID-19 can apply for a three-month extension for filing their annual accounts. Applications for the extension can be made through a fast-tracked online system and will be granted immediately and automatically where issues around COVID-19 are cited in support. An application for the extension must be made before the company’s filing deadline.

Companies House has also updated its guidance on seeking more time to file company accounts to include information on applying for the new extension. This indicates that companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for the extension. The guidance also confirms that if accounts are filed late, a penalty will be applied. Appeals against such penalties based upon COVID-19 factors will be considered on a case-by-case basis, applying existing policies.

Audits

The Financial Reporting Council states that audits should continue to comply with required standards, and additional time may be required to complete audits, even at the risk of delaying company reporting. In addition, several further measures have been introduced to allow companies and auditors to focus on delivering information to investors and the capital markets, including postponing auditor tenders and audit partner rotation and revising the deadlines for consultations to reduce demands on companies and audit firms.