Following the outbreak of the coronavirus/COVID-19 and the efforts by various governments all over the world to curb the spread through restrictions of movement; the Corporate Affairs Commission (CAC) has taken the initiative to guide Public companies whose Annual General Meetings (AGMs) are due on how to hold such meetings.

By a notice on its official website, CAC issued a notice on March 26, 2020, regarding how Public companies can hold their AGM by taking advantage of Section 230 of the Companies and Allied Matters Act, LFN 2004 (CAMA) which makes provision for use of proxies for meetings[1].

Section 230(1) of CAMA provides that

“Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him, and a proxy appointed to attend and vote instead of a member shall also have the same right as the member to speak at the meeting: Provided that, unless the articles otherwise provide, this section shall not apply in the case of a company not having a share capital.”

The CAC Guidelines in view of the directive on physical distancing and the restriction on the maximum number of people at every gathering due to COVID-19 pandemic are as follows:

1. The CAC in its directive has stated that the approval of the Corporate Affairs Commission (CAC) must be obtained before such AGM using proxies is held. The approval of the Corporate Affairs Commission (CAC) shall be obtained before such meeting is held. The application can be submitted to the Head Office in Abuja or by email to agabubakar@cac.gov.ng or rg@cac.gov.ng.
2. CAC may send a representative(s) as the observer(s) to the meeting, in the absence of which the Company shall send a detailed report to the CAC, after the meeting.
3. The meeting shall only discuss the Ordinary Business of an AGM as provided in S.214 of CAMA. However, where any Special Business is considered very urgent and necessary, the application letter shall provide the justification and the nature of the special business.
4. Notice of meeting and proxy form shall be sent to EVERY member in accordance with the requirements of CAMA, Companies will be required to provide the CAC with the evidence of postage or delivery of such notices after the meeting.
5. All the members shall be advised in the notice calling the meeting that in view of the Government directive on physical distancing and the restriction on the maximum number of people in every gathering due to the Covid-19 pandemic, attendance shall only be by proxy with list and particulars of persons willing to act as proxies for them to select therefrom.
6. The invitation shall be issued at the Companies expense as well as the stamp duties which shall be prepaid by the Company.
7. The proxies need not be members of the Company.
8. The Company shall be guided by the provisions of its Articles or CAMA as regards to the quorum. However, for the purpose of determining quorum, each duly completed proxy form shall be counted as one.

Worthy of note is the fact that the proxies need not be members of the company. However, the company shall be guided by the provisions of its Articles of Association or Section 232 of CAMA as regards to a quorum. For the purpose of determining quorum, each duly completed proxy form shall be counted as one. 

The above directive from CAC will aid Public companies in ensuring that their Annual General Meetings are held and ensuring the declaration of dividends for shareholders. Also, by virtue of the presentation of the financial statements and the reports of the directors and auditors at the AGM, the Annual Returns for the previous year ending can be properly filed at the CAC on or before the 31^st of June, 2020.

This directive also ensures that despite the recent pandemic, the election of directors in the place of those retiring, the appointment, and the fixing of the remuneration of the auditors and the appointment of the members of the audit committee will be carried out at such meeting and not hinder the operations of Public companies in this regard.

It is, however, important to note that in States where there is a lockdown, there may be difficulty in having members attend meetings physically albeit by proxy as both CAMA and CAC are silent on AGMs being held electronically.

The Nigerian Stock Exchange (NSE) has however in its Guidance Note on holding Virtual Meetings, advised all listed companies that plan to hold their Annual General Meetings to put in place adequate precautionary measures to ensure the safety of all stakeholders at the meetings. The Notice follows the outbreak of the novel Coronavirus (COVID-19) and pursuant to the provisions of Rule 19.1: Rules Relating to Board Meetings and General Meetings of Issuers, Rulebook of the Exchange, 2015.

The NSE, in a circular to issuers on the conduct of 2020 Annual General Meetings of companies listed on the Exchange, said the Nigeria Centre for Disease Control (NCDC) has issued a guidance document on safe mass gatherings in Nigeria. The circular notes that some listed companies which had already scheduled their AGMs to hold in the near future are advised to adopt the safety procedures provided by the NCDC in preparation for their AGMs and these procedures should be adequately communicated to all invitees to the AGM.

Also, for listed companies that wish to postpone their AGMs or are yet to schedule their AGMs, the NSE directs that pursuant to Rule 19.4(d) which deals with the Responsibility of the Directors/Trustees in Relation to General Meetings, Rulebook of the Exchange, 2015, and provides that ‘if an Issuer fails to hold its annual general meeting within nine months from the end of its financial year-end or within such extended period as may be approved by the Corporate Affairs Commission; the issuer shall file a report with the Exchange within ten business days of the end of the stipulated period explaining the reasons for their default, and they shall make an announcement in that regard in at least two national daily newspapers within five business days of receiving the Exchanges approval to make the announcement.

It is hoped that Public companies would take advantage of the use of proxies for holding meetings under CAMA and follow the guidelines provided by CAC.

We thank the CAC and NSE for these initiatives. The issue of virtual meetings is imperative. This is because until a vaccine is found for the Corona Virus, the future of meetings would be virtual as large gatherings may need to be discouraged for a long time to come.

Therefore, investment in technology by companies and improved or increased investment in technology by the CAC, NSE and SEC is important as their representatives also need to be protected in observing these meetings to ensure that they can monitor virtually.

[1] https://www.cac.gov.ng/3956-2/