As we continue to work together as a country to contain COVID-19 and to ‘flatten the curve’, the restrictions in travel and gathering can make it difficult from a practical perspective to manage the affairs of a company and for company directors to ensure that they are fulfilling their obligations accordingly. The uncertainty regarding when such restrictions will be lifted also means that company officers should now be considering alternative options for holding meetings and where the company constitution does not allow for such alternatives now is the time to put those changes in place. Below are some practical tips that may be of assistance to company officers.
1. Electronic Meetings
The Companies Act 2014 (the “Act”) provides that, save to the extent that the constitution provides otherwise, directors’ meetings may be held by electronic means (telephonic, video or other electronic means). Physical meetings of directors are most likely an impossibility in the current climate. There are many video applications available that can be availed of to host such meetings, the most popular being Skype or Zoom. Alternatively, the directors’ meeting could be held via teleconference or a combination of video and teleconference.
Location of Directors’ Meetings: Section 161(6)(b) of the Act provides that:
such a meeting shall be deemed to take place—
(i) where the largest group of those participating in the conference is assembled;
(ii) if there is no such group, where the chairperson of the meeting then is;
(iii) if neither subparagraph (i) or (ii) applies, in such location as the meeting itself decides.
Companies should also be cognisant of their tax residency when convening their board meetings. Where a company elects to be Irish tax resident for corporation tax purposes, amongst other requirements, board meetings should be held in Ireland as this is where the central management and control of the company is required to sit.
Annual General Meetings
Irish companies must hold an Annual General Meeting (AGM) once in each year, and not more than 15 months may elapse between AGMs. Where provided for in a company’s constitution, shareholders may participate in an AGM by electronic means. This enables shareholders to participate in the meeting without attending in person and to cast their own vote without having to rely on a proxy.
Dispensing with an AGM: There is the possibility for some companies to dispense with the requirement to have an AGM. Namely, single member companies and new model private company limited by shares (LTD). This is achieved by all members, or in the case of a single-member company by the sole member, approving and executing a written resolution. It should be noted that under the Act, it is not possible to dispense with the requirement to hold an AGM which is due to be held in a future year. The procedure to dispense with the requirement to hold an AGM must be passed every year, if required.
Adjourning an AGM: A company’s constitution will usually allow the company to change the date and location of its AGM, if required. However, for companies that cannot dispense with the requirement to hold an AGM care should be taken when deciding to exercise this option in order to avoid falling foul of the timelines.
2. Written Resolutions
Under section 161 of the Act and provided that the company’s constitution does not provide otherwise, a resolution signed by all the directors entitled to receive notice of a meeting of directors will be as valid as if it had been passed at a directors’ meeting duly convened and held.
Similarly, under section 193 of the Act a resolution in writing signed by all the members of a company for the time being entitled to attend and vote on such resolution at a general meeting (or being bodies corporate by their duly appointed representatives) shall be as valid and effective for all purposes as if the resolution had been passed at a general meeting of the company duly convened and held. Also, under section 194 of the Act a majority members resolution can be passed in this way.
Both Directors and members written resolutions can be signed in counterparts, meaning that it’s not necessary that each party sign the same piece paper. This also has the advantage that the resolution can be circulated electronically to each party, but the originals will need to be retained by the company, with the company’s books.
The main point for companies is to review the provisions of their constitutions to ensure the company is entitled to avail of the holding of directors meetings and AGMs electronically, and that the constitution does not preclude the company from passing directors or shareholders resolutions in writing.
Our thoughts go out to all of those affected by COVID-19.
Please stay safe.
The content of this article is provided for information purposes only and does not constitute legal or other advice.