Companies Act to be amended to allow for electronic AGMs

Companies Act to be amended to allow for electronic AGMs

Calls made for Act to be modernised in light of COVID-19 conditions

BY ABBION ROBINSON
Business reporter
robinsona@jamaicaobserver.com

Sunday, June 28, 2020

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THE Companies Office of Jamaica (COJ), in conjunction with the Ministry of Industry, Commerce, Agriculture and Fisheries, is presently working on amendments to the Companies Act which will permit listed companies to hold virtual and hybrid annual general meetings (AGM), says Judith Ramlogan, chief executive officer (CEO) of COJ.

The Companies Act, which regulates trading companies and other associations, presently does not allow for virtual, electronic and or a combination of both for onsite AGMs to be held.

AGMs provide one of the few opportunities shareholders have to question the board, engage directly with management, and hear the views of other shareholders.

Ramlogan told the Jamaica Observer's Sunday Finance that while companies have asked for guidance regarding the holding of their AGMs in light of the COVID-19 pandemic and the measures the Government has had to put in place to protect the public, the attorney general's department, in particular, has advised that urgent steps should be taken to amend the Act to allow for those types of meetings to be held.

Other companies that have previously held AGMs, namely GraceKennedy Limited and Victoria Mutual Building Society, have made assurances that they were in compliance with legal requirements due to their quorums. This refers to the minimum number of members of a group or organisation required to be present at any of its meetings to make the proceedings of that meeting valid.

“The shareholders/directors decide on the quorum for meetings, and that is usually stated in the company's Articles of Incorporation. Individual companies set quorums for meetings, taking into account their particular business needs and requirements. They usually want to avoid having their business transacted in the absence of a minimum number of members but do not want to prevent or delay work by setting too high a quorum,” Ramlogan explained.

“Section 130 (1)(c) of the Companies Act states that in the case of a private company, two members and in the case of a public company, three members constitute a quorum for a meeting. Presently there are no amendments to the Companies Act proposed in relation to the number of members which constitute a quorum. Companies, however, can adjust their articles which dictate the quorum, since Section 130 sets the minimum threshold,” she shared with this publication.

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COMPANIES APPROVED BY SUPREME COURT

The Jamaica Stock Exchange's (JSE) application to have electronic AGMs for 16 of its listed companies were approved by the Supreme Court, based on the grounds that it was impracticable for the companies to hold their 2020 AGMs in person given COVID-19 restrictions of social distancing and other requirements imposed on citizens.

The 16 companies are Barita Investments, Berger Paints, Caribbean Cement, FosRich Limited, JMMB Group, Lasco Distributors, Lasco Financial Services, Lasco Manufacturing, Main Event, Mayberry Investments, Sagicor Group, Supreme Ventures, Jamaica Stock Exchange, TransJamaica Highway Limited, Victoria Mutual Investments, and Wigton Windfarm. The court order does not extend to companies that were not a part of the application.

Supreme Court judge Justice Laing granted the application on Wednesday (June 24) after hearing submissions from attorney Michael Hylton, who represented the JSE in court.

The 16 companies are now permitted to call and hold their 2020 AGMs by live stream or broadcast using electronic means. Shareholders are allowed to participate and vote electronically either before or at the meetings.

The 16 companies can also now serve their shareholders with notices of AGMs and supporting documents by e-mail or by postings on their websites or the JSE's website. Some of these 16 companies, which might otherwise have missed their deadlines for 2020 AGMs, now have up to December 31, 2020 to call these meetings.

“Our decision to go to the court is to ensure that there are no grey areas in respect to the manner in which our AGMs are held. This action and ruling recognises that there is a definite need for an amendment of the Companies Act to modernise it and also to treat with issues relating to business continuity. Many companies have made contribution to us and the Government in relation to the modernisation of the Companies Act to include the holding of meetings, the electronic dissemination of notices for meetings, and demutualisation of shares methods of communication to shareholders, among other areas of modernisation,” Marlene Street Forrest, managing director of JSE, told Sunday Finance.


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