Knowledge Highlights 2 April 2020
The Covid-19 pandemic has caused a number of disruptions to corporate and commercial life as social distancing measures and limits to physical gatherings came into force. Businesses required to hold meetings have been faced with challenges and uncertainty. Legislative provisions to provide certainty to businesses have been announced and these are expected to be introduced in Parliament on or around 7 April 2020.
In relation to listed entities, on 31 March 2020, the Accounting and Corporate Regulatory Authority (“ACRA”), Monetary Authority of Singapore (“MAS”) and Singapore Exchange Regulation (“SGX RegCo”) updated the guidance for issuers on safe distancing measures when conducting general meetings amid the Covid-19 outbreak. ACRA, MAS and SGX RegCo announced in a joint statement that the updated guidance supersedes the earlier guidance issued on 19 March 2020.
On the same day, in relation to entities, whether listed or (on a wider scale) unlisted, the Ministry of Law (“MinLaw”) and Ministry of Finance (“MOF”) issued a media release announcing that new legislation will be introduced in Parliament to provide legal certainty for businesses on the holding of meetings where personal attendance is provided for in written law or in legal instruments.
Updated guidance on general meetings for listed entities
SGX RegCo had earlier announced measures to give time extensions for issuers with 31 December financial year-end to hold their annual general meetings (“AGMs”) by 30 June 2020. Following the Ministry of Health’s advisory on safe distancing measures on 24 March 2020, ACRA, MAS and SGX RegCo issued a joint statement on 25 March 2020 on safe distancing measures for issuers when conducting meetings.
On 27 March 2020, the Infectious Diseases (Measures to Prevent Spread of Covid-19) Regulations 2020 (“Regulations”) came into force. The Regulations prohibit certain activities and events (e.g. conventions), limit attendance for non-prohibited events to 10 individuals, and impose safe distancing measures for non-prohibited events held in public places.
This was followed on 31 March 2020 by the media release issued by MinLaw and MOF as described above.
In view of these developments, the updated guidance provides as follows:
- Issuers can choose to defer AGMs to after 30 April 2020, as set out in SGX RegCo’s announcements on 7 and 27 February 2020, if the specified criteria and conditions are fulfilled.
- Issuers who choose to proceed with AGMs or general meetings before 30 April 2020 must conduct the meeting in a manner that (a) provides the opportunity for shareholders to ask questions, (b) provides for the meeting to be shown by “live” webcast, and (c) allows for proxy voting. At these meetings, any quorum requirements will be satisfied through the attendance of the minimum number of shareholders specified in the issuer’s constitution (which may be satisfied through the attendance of any director or senior management of the issuer who holds shares), or up to the number of individuals permitted under the Regulations, whichever is lower.
Issuers must allow shareholders an opportunity to ask questions in the following ways:
- Issuers must invite their shareholders to submit any questions they may have in advance. Issuers should then publicly address substantial queries received from shareholders at the general meeting via the issuer’s website, through “live” webcast, and on SGXNet.
- Other arrangements may include organising virtual information sessions before the general meetings and the close of proxy voting to provide shareholders with a forum to ask questions and engage with management and the board of directors.
The updated guidance also provides as follows:
- Proxy voting: In relation to proxy voting, shareholders must appoint the chairperson of the general meeting to act as proxy and direct the vote at the general meeting. Issuers are also strongly encouraged to provide at least 21 days’ notice to shareholders on the general meetings to allow shareholders to consider the matters, pose questions if necessary and vote via proxy. Shareholders must submit the proxy form by mail or electronically (by way of example, via e-mail).
- CPF and SRS investors: Central Provident Fund (“CPF”) or Supplementary Retirement Scheme (“SRS”) investors who wish to appoint the chairperson as their proxy should approach their respective CPF Agent Banks or SRS Operators to submit their votes at least seven working days before the general meetings.
- Publication of minutes: Issuers must publish minutes of the general meetings on their website, including its responses from management and the board of directors to substantial queries and relevant comments from shareholders, as recommended in the Code of Corporate Governance 2018.
The guidance notes that disclosures are crucial to shareholders’ decision-making. With the Covid-19 situation having had an extraordinarily huge global impact in just a matter of weeks, many issuers are operating under circumstances that are evolving very quickly and significantly. The guidance reminds issuers to carefully consider these and other developments in their responses to shareholders and their disclosures.
Legislative proposals to provide legal certainty on holding of meetings for businesses
MinLaw and MOF note that certain provisions in written law and certain legal instruments (such as a company’s constitution) provide for personal attendance at meetings. With the Regulations in force, the Government has received feedback that businesses are uncertain about how to comply with both those provisions and the Regulations. The Government will therefore introduce new legislation at the next sitting of Parliament (on or about 7 April 2020) (“Proposed Provisions”) to provide legal certainty on the holding of such meetings.
Subject to Parliament’s approval, the Proposed Provisions will:
- allow alternative arrangements to be prescribed where:
- personal attendance at a meeting or class of meetings is provided for in any written law or legal instrument; and
- it is inexpedient or impracticable for the meeting or class of meetings to be convened, held or conducted in the manner provided for in the written law or legal instrument, in view of the prevailing Regulations; and
- provide that meetings held or deferred, on or after 27 March 2020, in accordance with such prescribed alternative arrangements, will be deemed to satisfy the relevant requirements under written law or legal instrument, despite anything to the contrary in any law or legal instrument.
The following is a non-exhaustive list of meetings where personal attendance is provided for in written law or in a legal instrument:
- meetings (e.g. AGMs and extraordinary general meetings) held under the Companies Act and each company’s constitution;
- meetings held under trust deeds, in particular, listed business trusts and listed real estate investment trusts;
- meetings held under the Variable Capital Companies Act and the variable capital company’s constitution;
- creditors’ meetings; and
- meetings in relation to the winding up or liquidation of entities.
If needed, alternative arrangements may be prescribed in respect of these meetings. In particular, alternative arrangements are intended to be prescribed for companies, including listed companies, listed business trusts and real estate investment trusts.
The Proposed Provisions, if passed, are intended to be brought into force as soon as possible. Entities that are planning to conduct meetings in the meantime but are uncertain about how to comply with the prevailing safe distancing measures without contravening provisions in written law or legal instruments may approach the respective regulators for guidance on how the meeting should be conducted. Meetings should, at the minimum, adopt the following:
- allow and strongly encourage attendance at meetings using tele-conferencing, video-conferencing, or other electronic means;
- allow meeting attendees to appoint their proxies using electronic means, such as by e-mail;
- allow meeting attendees with rights to participate to exercise these rights to the extent possible and appropriate, such as by allowing questions to be submitted by e-mail in advance, and responses to be conveyed by tele-conferencing, video-conferencing, or other electronic means;
- if voting is required, strongly encourage meeting attendees to vote by proxy, or (if available) by electronic modes of voting; and
- provide meeting attendees with access to meeting materials.
MinLaw and MOF’s announcement also states that entities that are already able to comply with the prevailing safe distancing measures in accordance with the provisions in written law and their existing legal instruments should do so. The prescribed alternative arrangements are intended to help those who face challenges in complying with the prevailing safe distancing measures, and are not intended to be mandatory.
- ACRA, MAS and SGX RegCo update guidance on general meetings
- Covid-19 Relief Measures: Upcoming Legislative Provisions to Provide Legal Certainty on Holding of Meetings
In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at firstname.lastname@example.org.