Businesses, communities and companies across the globe have started making daily shifts in operation as a way of coping with the rapid spread of COVID-19. Considering the seriousness of the pandemic, this has led to major adjustments to the lifestyle and conduct of businesses. This includes working remotely and the transition to a virtual environment.
With meetings over a certain number of attendees in a physical location and mass gatherings now prohibited, it is important to ensure that during this challenging time, general meetings can still be conducted and the effectiveness as well as the transparency of the same are preserved and upheld.
Principle C (II) and Practice 12.3 of the Malaysian Code on Corporate Governance state that companies should consider leveraging technology in order to facilitate greater shareholders’ participation and enhance the proceedings of general meetings.
This article thus aims to provide a comprehensive overview of the guide on the conduct of both fully virtual general meetings and hybrid general meetings including Annual General Meeting and Extraordinary General Meeting for listed issuers during the Movement Control Order (MCO) period.
Fully Virtual General Meetings
A fully virtual meeting is held entirely by means of electronic or online communication facility which permits all participants to adequately communicate with each other during the meeting without a common convening physical venue. However, less than 8 essential individuals which include the Chief Executive Officer, the Chief Financial Officer, the company secretary, the auditor, the scrutineer and those in charge of providing the visual and audio support are allowed to be physically present at a common physical venue known as the broadcast venue which complies with Section 327(2) of the Companies Act 2016.
Although a physical venue meant to convene only the essential individuals with the fewest number possible during a fully virtual meeting is allowed, social distancing and precautionary measures are to be strictly observed by those who are present at the broadcast venue.
Hybrid General Meetings
A hybrid general meeting is a meeting where some shareholders attend the meeting via online, audio and/or video capabilities while others will be present at a physical meeting venue. However, during the MCO period, a listed issuer shall not conduct a hybrid general meeting and the Security Commission (SC) will facilitate time-limited travel exemptions only for the essential individuals to conduct a fully general meetings per the Guidance on the Conduct of General Meetings for Listed Issuers issued by SC on 18.04.2020.
A listed issuer can apply for the time-limited travel exemption for the essential individuals to conduct a fully virtual general meeting from the SC by submitting the application to AGM@seccom.com.my. The application must be submitted to the SC no later than 5 working days prior to the date of the general meeting.
Additional Information
Manner of the Meeting: In instances where a listed issuer’s constitution or trust deed expressly prohibited the usage of technology to conduct its general meeting, a listed issuer is advised to defer the conduct of the general meeting until circumstances permit the use of a physical venue. However, if the constitution or the trust deed is silent on the manner its general meeting should be held, a listed issuer is permitted to leverage technology pursuant to Section 327(1) of the Companies Act 2016 which allows usage of technology to enable members to participate and to exercise their rights to vote and speak at the meeting.
As far as Annual General Meeting is concerned, an extension of time to conduct Annual General Meeting may be made to Companies Commission of Malaysia (CCM) pursuant to Section 340(4) of Companies Act 2016.
Notice of the Meeting: A listed issuer may also circulate the notice of the meeting online provided that its constitution or trust deed does not prohibit it expressly. However, the notice must still comply with any applicable legal requirements such as Section 317 and Section 319 of the Companies Act 2016.
Questions by the Shareholders: Shareholders may submit their questions prior to the meeting through a manner specified by the listed issuer within the stipulated time.
Requirements of Fully Virtual Meetings: In addition to the requirements under Section 327 of Companies Act 2016 and the Guidance on the Conduct of General Meetings for Listed Issuers, a listed issuer should:-
ensure there is reliable infrastructure to enable the conduct of a fully virtual general meeting including enabling members to exercise their rights to speak and vote at the meeting;
provide guidance to shareholders on the requirements and method of participating in the general meeting using the selected platform;
identify a broadcast venue;
ensure only up to eight essential individuals are physically present at the broadcast venue and social distancing precautionary measures are practiced; and
only eligible members are allowed to participate in the meeting.
Others: The Chairperson must be physically present at the broadcast venue and the notice must indicate the broadcast venue as the place of the meeting in addition to the online platform used to ensure that all members will have access to it and are able to participate as per paras 1.3 and 2.14 of the Guidance on the Conduct of General Meetings for Listed Issuers.
Conclusion
Although physical meetings have always been the most ideal way of convening general meetings, a shift to virtual platforms amid Coronavirus outbreak has become the only way for companies to discharge its statutory obligations of convening meetings and continue to engage members. Most importantly, it is assuring to note that the Companies Act 2016 does not prohibit the usage of technology especially in light of COVID-19 and it is paramount to ensure that the shareholders still have an avenue to engage companies and their management with questions and are not deprived of their statutory rights.
For further clarification, please contact our Ms. Brenda or Ms. Vivi at 03-2171 1484 or email at 03-2171 1484 or at mail@azamlaw.com.
