JSE ADDRESSES AGM CHALLENGES
Electronic AGMS are not permissible under Jamaican law
The traditional annual general meeting (AGM) season is underway for companies listed on the Jamaica Stock exchange (JSE) with a year-end date of December 31, however the measures implemented by the Government to curb the spread of COVID-19 pose significant challenges for said companies to host these meetings, which are required under the Companies Act.
JSE posted on its website a statement in response to its listed companies’ queries.
“Many companies have asked the JSE to provide guidance and leadership and some have sought to advise of their plans in the hope of ratification of same by the JSE. It is important for us to make it clear that the validity of the holding of an AGM is a matter of law and that the JSE cannot make an invalid meeting valid by ratification,” JSE stated.
It however noted the guidance offered by the Companies Office of Jamaica (COJ) on the matter which concludes and advises that:
1. A virtual or electronic AGM is not permissible under Jamaican law;
2. A combination of an on-site meeting combined with a virtual or electronic AGM is not permissible under Jamaican law, and
3. Companies wishing to proceed to hold AGMS should consider securing a court order under section 130(2) of the Companies Act which allows the court to direct how a meeting may be held where it is impractical to hold one in the legally prescribed manner.
JSE added that companies which hold meetings that are not in keeping with the law run the risk of the entire proceedings later being invalidated.
AGMS provide one of the few opportunities shareholders have to question the board, engage directly with management, and hear the views of other shareholders.
LEGAL ADVICE AND ASSISTANCE
According to JSE, it had sought the legal advice and assistance of litigation attorney Michael Hylton, QC of Hylton Powell attorneys-at-law, and commercial attorney Lance Hylton of Hylton and Hylton, on how best the JSE might assist listed public companies in a manner that is in the best interest of companies, shareholders and the JSE.
Having considered the advice, it proposed to proceed as follows:
1. The JSE will institute a representative action in the Supreme Court of Jamaica on behalf of companies that wish to hold AGMS under the sanction of the court;
2. Companies which wish to benefit from the court’s order will have to agree to share the legal costs involved to an agreed maximum amount, and cooperate with the process as reasonably advised by the attorneys;
3. While a positive outcome in any court matter cannot be guaranteed, Queen’s Counsel has expressed the view that the application has a “strong” chance of success;
4. The proposed timeline is as follows:
a. Identify and then confirm companies interested in participating May 14-19;
b. Preparation and filing of Court papers – May 19-22;
c. Court applications and hearings relating to procedural and substantive matters — May 22 - June 30.
As such, JSE estimated that as of July 1, 2020, companies will be able to send out notices for their AGMS.
The intention is to secure an order that will allow participating companies to hold their AGMS during the time of COVID-19 restrictions by way of the following processes, which the JSE considers to be reasonable to companies while also in the best interest of shareholders.
This includes the delivery of notice to members by newspaper, company website and JSE site, which should provide a link to where the proxy form and other board papers can be downloaded.
A company can either then hold a hybrid meeting — wherein a quorate meeting will be convened at a physical venue and live- streamed, and will utilise software which allows all members accessing to see and hear the proceedings and be allowed to ask questions in such reasonable order and manner as the chairman may allow, and to vote electronically – or a fully electronic meeting, which achieves the same thing.