Coronanomics: AGMs Could Be Held Up In 2020


Thursday, March 19, 2020 / 7:25 PM / TheAnalyst /  Proshare research / Image Header Credit: EcoGraphics


Company's listed on the Nigerian Stock Exchange (NSE) may soon find themselves shifting the dates of their annual general meetings (AGMs) or simply craft intelligent ways of holding such meetings in cyberspace. As the novel Coronavirus disease (COVID-19) becomes widespread, governments globally are imposing new rules of social gatherings with social distancing becoming the new normal.


Corporations intending to hold mandatory meetings such as AGMs, extraordinary general meetings (EGMs) and court ordered shareholders meetings may have to look for a "walk-around" arrangement that meets minimum legal requirements while still respecting the rules of social distancing at a time of a pandemic virus spread. The experience is new so, market stakeholders may need to make up the rules as they go along (see table 1 below).


Table 1: New AGM Policy Measures and Guidelines for Selected Countries

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The New Social Normal


The spread of the coronavirus across various countries and continents has caused fear and pain. The adverse effect of COVID-19 is not limited to financial markets, other markets such as have been commodity markets and supply chains have been disrupted. The increasing rise of social distancing challenges social and financial stability. In order to curtail the disruption caused by the pandemic, some countries like the USA, Italy, France and Spain have opted for partial lockdowns of their socio-economic networks by restricting movement.

 In a bid to prevent the spread of the virus, the US Center for Disease Control and Prevention (CDC) recommended that no gathering should have more than 50 people including weddings, festivals, parades, concerts, sporting events or conferences and other types of assemblies. In reaction to increases in the number of confirmed cases of COVID-19 in Nigeria the Lagos state, Ogun state, and Kwara state governments have barred large gatherings using the same criteria as the USA Government.

Corporate analysts have noted that companies listed on global stock exchanges are required by law to hold annual general meetings annually to present their statement of financial affairs to shareholders at least once a year. In Nigeria, the Company and Allied Matters Act (CAMA) requires all Nigerian public limited companies (PLCs) to hold AGMs within 15 months between the last AGM and the next. However, with restrictions imposed on social gatherings as a result of COVID-19 holding these meetings over the next few months will be difficult.

With increase in restrictions and gatherings arising from the spread of COVID-19 suggestions on how companies can navigate the challenge.  For example, in the U.K a guidance for holding AGM in the midst of coronavirus was jointly produced by Slaughter and May and The Chartered Governance Institute. The guidance offers five (5) suggestions reflecting the UK company law and associated regulation. They include adapting the basis on which you hold the AGM, delaying convening the AGM, postponing the AGM (if permitted under the Articles), adjourning the AGM and conducting a hybrid AGM (if permitted under the Articles).

 The regulatory arm of the Singaporean Exchange also provided guidelines for listed companies or trust to hold their general meetings amid the COVID-19 situation. Ten (10) measures were released by its regulatory arm all of which could be classified under "adapting the basis on which you hold the AGM". Some of the measures included;

  • Segregate attendees across different venues
  • Reducing the scale of the meeting at any one venue to below 250 persons.
  • Organizing the venue to reduce the crowding of attendees and improve ventilation
  • Providing shareholders with alternative ways to participate in the meetings.
  • Enabling shareholders to appoint the chairman of the general meeting, or any other person to act as proxy and direct the vote at the meeting.
  • Publishing minutes of the general meetings on the issuer's website, including the responses from the board of directors and management to substantial queries and relevant comments from shareholders.
  • Adopting further digital tools for the conduct of their general meetings etc.

In the light of the spread of COVID-19 in the US, the U.S Securities and Exchange Commission (SEC) issued guidance to assist public companies with upcoming annual general meetings. Some of the measures were;

  • Regulatory flexibility to companies seeking to change the date and location of the meetings and use new technologies, such as “virtual” shareholder meetings that avoid the need for in-person shareholder attendance, while at the same time ensuring that shareholders and other market participants are informed of any changes.
  • Encourages companies to provide shareholder proponents with alternative means, such as by telephone, to present their proposals at the annual meetings in light of the difficulties that shareholder proponents face due to COVID-19

The rise in the number of confirmed cases of coronavirus to twelve (12) in Nigeria has called for proactive measures or guidelines to be released regarding AGMs. The Nigerian Stock Exchange (NSE) on Thursday 19th March 2020 issued some guidance on the matter. Some of the guidance recommendations included:

  • Companies schedules to hold their AGMs in the near future were advised to adopt safety procedures.
  • Companies wishing to postpone their AGMs or were yet to schedule their AGMs should pay attention to Rule 19.4(d) Responsibility of the Directors/Trustees in Relation to General Meetings, Rulebook of the Exchange, 2015 (Issuers' Rules)

Dead People Do Not Trade Financial Assets

The new rules of business/social gathering may put a pause on intense shareholder activity, but with COVID raging rampant, recent advisories by self-regulatory organisations in the stock market is more than a passing comment, it requires strict adherence as dead people do not trade financial assets.

Related Link: COVID-19: NSE Advises Companies to Put Adequate Precautionary Measures In Place Ahead of 2020 AGMs



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