Listed firms get nod to hold virtual AGMs

Virtual meetings such as via video conferencing are becoming popular in the wake of the coronavirus pandemic.

A landmark ruling by the High Court now allows listed companies to hold virtual Annual General Meetings (AGMs).

In the wake of the coronavirus pandemic, Nairobi Securities Exchange-listed companies, as well as Saccos, have not been able to hold such meetings after the government banned large gatherings in a bid to contain the spread of deadly disease.

This has, in turn, occasioned delays in the payment of dividends to shareholders, among other key functions.  

According to the ruling by the High Court in Nairobi, listed firms will now be allowed to hold AGMs virtually after issuing the statutory 14-day notice to shareholders on the intended meetings. They will also have to obtain a no-objection certificate from the Capital Markets Authority (CMA).

The firms will at the same time be required to set out in detail, in their request to CMA, how the meeting will be held - whether virtually and/or electronically, technologically or hybrid.

Such companies will also have to confirm and demonstrate that shareholders shall be furnished with a notice of the general meeting as provided for under the Companies Act 2015, have sufficient information to make informed decisions on any resolutions placed before the meeting and be accorded an opportunity to ask questions and seek clarifications from directors.

There must be proof shown, as well, that the shareholders will be given the opportunity to vote, with clear registration and voting procedures.

Provisions of the articles of association for some companies such as WPP Scangroup and Kenya Airways bar them from holding virtual general meetings, and this has hampered sales of assets and payment of dividends.

In such cases, the companies will be required to notify CMA of the restriction and their intention to seek court orders to allow them to hold virtual AGMs. To avoid falling behind in its operations, WPP Scangroup has already applied to the High Court under Section 280 of the Companies Act, 2015 for appropriate orders and direction.

CMA has applied for the widening of the scope of the anticipated court order to benefit all listed companies.

“It is hereby ordered that any meeting convened held and conducted in accordance with this order and under section 280 of the Companies Act be and is hereby taken for all purposes to be a general meeting of the company properly convened, held and conducted, subject to the foregoing conditions being met,” reads the court order in part.