Due to the rising number of COVID-19 cases and the state of the health-care system, the Government has put a pause on annual general meetings (AGM) and extraordinary general meetings (EGM) for the next three weeks (March 23 – April 13) unless held in a fully virtual format with the permission of the Commercial Division of the Supreme Court.
In a raft of new measures to curtail the spread of the virus, the Government implemented a new general restriction on the face-to-face version of these meetings unless they are fully virtual with limited exemptions allowed, except for an application made to the medical officer of health to allow a physical gathering. This is the second time AGMs have been limited due to COVID-19 with the initial onset of the pandemic resulting in the Government’s initial 15-person limit on gatherings.
Although some countries have measures in their legislation to allow for AGMs to be held virtually, Jamaica’s Companies Act (2004) doesn’t make a provision for shareholder meetings to be held in a virtual or electronic format.
As a result, the Jamaica Stock Exchange (JSE) led a representative action to allow for AGMs to be held virtually or in a hybrid format. This initial measure was open to all listed companies that wanted to share the US$46,000 application cost to the Supreme Court through attorney Michael Hylton, QC. However, among the 89 listed companies on the JSE, only 16 joined the action.
Since then, the JSE returned to the Supreme Court in November for a second representative action for seven other companies whose AGMs were near and were unable to hold it in the traditional face-to-face format.
Other companies have gone directly to the Supreme Court to request permission to hold their AGMs in a hybrid or electronic format, with Key Insurance applying for two years and Salada Foods Limited requesting a three-year permission in light of the current limitations in place due to the law.
With Jamaica Teas Limited (JAMT) and QWI Investments Limited’s AGMs scheduled for next week Tuesday at the Jamaica Pegasus hotel, it’s unknown what will happen since the company has no Supreme Court permission to hold its AGM in a virtual format.
When contacted by the Business Observer, chairman of JAMT & QWI John Jackson said that the companies have reached out to their lawyers to seek guidance and clarity on the new measures. Jackson further explained that he thinks the companies will be able to hold their AGMs and EGMs due to the provisions currently allowed under the Disaster Risk Management Act which doesn’t limit hotels.
JAMT & QWI held their AGMs in person last year under strict protocols with shareholders being able to view the meeting. GraceKennedy Limited also held its AGM without the public due to the company’s articles only requiring three people present to form a quorum for the meeting.
Although several companies had made amendments to their articles of incorporation to allow for virtual AGMs to be held in the future, several large conglomerates decided against the action due to the expectation that the Companies Act would have been amended last year.
This was further reiterated by a senior counsel who said that a company shouldn’t amend its articles ahead of the law itself being considered to take effect. However, with no changes a year later and their statutory requirements requiring a meeting to be held within 15 months of the last one, several firms are returning to the Supreme Court to gain permission once again. Section 130 (2) of the Companies Act doesn’t limit the amount or timeline of AGMs which can be given permission to be held virtually.
Calls made to the Ministry of Industry, Commerce, Agriculture and Fisheries reveal that amendments to the Companies Act are currently being debated at the ministry level before being tabled in Parliament. Further queries to the Prime Minister’s Office resulted in an explanation that these meetings can be held at hotels once it’s in line with their COVID-19 policy for gatherings.
Despite this expected change in the future, managing director of the JSE Marlene Street Forrest has sent out a notice to companies about a new representative action being made in light of the new government measures and implications for companies’ compliance with the law and JSE rules.
All companies which are domiciled in St Lucia can hold their AGMs virtually due to the International Business Companies Act permitting this meeting format.