Holding board or shareholder meetings using Skype or Zoom in the COVID-19 lockdown

26 Mar 2020

With the current government restrictions in place across the UK, many businesses are now using Skype, Zoom and other video conferencing services for their internal meetings. These communication technologies will be vital in the coming weeks and months to keep businesses operating effectively whilst employees are working remotely. Many directors and business owners however may be asking what the legal position is in company law for using these technologies to hold more formal meetings such as board meetings and even shareholder meetings.

Board meetings

English company law permits directors to hold board meetings remotely through electronic means. Indeed, many companies will have articles of association to specifically allow for board meetings to be undertaken in this way. Any business owners who are unsure if their articles make such an allowance, especially those with articles of association that may not have been updated for a long time, should consider seeking advice. Whilst rare, some articles of association may specifically require physical meetings, and business owners with these restrictions will need advice to amend them to allow for virtual meetings.

If board meetings are to be held by such virtual methods, the following is good practice:

  • all directors entitled to receive notice to give their express consent to the meeting being held by such virtual means
  • the arrangements are such that all directors can hear each other clearly
  • voting on resolutions are undertaken one director at a time to ensure there is no confusion over voting
  • minutes of any such meeting are circulated to each director for approval to ensure they are a correct record of the business transacted and such minutes record that the meeting has been held by virtual means

Shareholder meetings

Physical shareholder meetings have become rare occurrences since the requirement for private companies to hold an annual general meeting was dispensed with. Most shareholder resolutions are now passed by written resolution, whereby each shareholder ‘votes’ by signing a copy of the written resolution(s) proposed to be passed. Each shareholder can also sign their own copy of the written resolution, as it is not a requirement for all shareholders to sign one copy.

Holding a physical shareholder meeting in the current climate clearly goes against government advice. The current advice from the Chartered Governance Institute is that articles of association should be reviewed and, meetings should be postponed, or adjourned if notices have already been sent out.

Whilst virtual shareholder meetings are possible, the law requires shareholders to be able to actively participate in a meeting and so the technology used will need to allow a shareholder to speak and raise questions at the virtual meeting. For most owner-managed businesses with a small number of shareholders this should be possible with Zoom, Skype and other video conferencing services. For larger companies with a greater number of shareholders this may prove more difficult. Steps will need to be taken to ensure all shareholders have the opportunity to participate. In either case, it is recommended that advice is sought if a company is intending to hold such a meeting virtually in the near future to ensure any resolutions passed are valid.

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Author

Jonathan Sherman

Associate