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Coronavirus - Corporate Insolvency and Governance Act 2020 becomes law - UK

  • United Kingdom
  • Coronavirus - Regulatory issues
  • Corporate

02-07-2020

The Corporate Insolvency and Governance Bill received Royal Assent on 25 June 2020, becoming the Corporate Insolvency and Governance Act 2020 (CIGA). The CIGA came into force generally on 26 June 2020. 

What does the Act cover from a corporate perspective?

Our earlier briefing here provides a detailed summary of the relevant provisions of the Corporate Insolvency and Governance Bill that are relevant as regards holding Annual General Meetings (AGMs) and other general meetings. There have been no substantive changes to these aspects as the Bill made its way through the Parliamentary process. The relevant provisions regarding meetings are set out in Schedule 14 of the CIGA.

Where companies (or other relevant bodies to which the CIGA applies) are required to hold general meetings between 26 March 2020 and 30 September 2020 (or such later date, if the provisions are extended), being the ‘relevant period’, they will have greater flexibility in how they hold such meetings, including virtually. In summary:

  • the meeting need not be held at any particular place;
  • the meeting may be held, and votes may be cast, by electronic means or any other means; and
  • the meeting may be held without any number of those participating in the meeting being together at the same place.

Limitations are placed on shareholders’ rights during the relevant period. Members do not have the right to attend a meeting in person, to participate in the meeting other than by voting, or to vote by particular means.

The above provisions apply irrespective of the provisions of a company’s articles of association (Articles) and the Companies Act 2006 (CA 2006).

Further, for AGMs otherwise due to be held between 26 March 2020 and 30 September 2020, such meetings can be delayed until 30 September 2020, again overriding the provisions of the CA 2006 and the company’s Articles. There is power in the CIGA for The Government to review the situation at 30 September 2020 and determine whether a further extension of time of up to eight months is necessary.

Accounts & other Companies House filings

The CIGA provides public companies with an extension of the period within which their reports and accounts must be filed with Companies House where these are due to be filed between 25 March 2020 and 30 September 2020. These provisions can now be found in section 38. The filing period for public company accounts is extended to the earlier of 30 September 2020 and the period of 12 months immediately following the end of the relevant accounting reference period. In the light of this, Companies House have published guidance regarding this temporary extension, which can be found here.

On an administrative level, the Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020 were made on 25 June 2020 under section 39 of the CIGA. These Regulations came into force on 27 June 2020 and extend a range of filing deadlines for companies and other entities registered at Companies House falling after that date. For example, these Regulations extend the accounts filing deadline by three months to twelve months for private companies, and the 21 day deadline for registering a charge against a company’s assets is extended by 10 days to 31 days.

What does this mean for companies

The timing of these measures mean that many companies, particularly those with a 31 December year end, will already have held their 2020 AGM. The Act is permissive in allowing virtual AGMs to be held during the relevant period without provision having been made for this in the Articles. However, this will be a new development for the majority of companies. Companies that have not yet held their AGMs will have to decide whether they want to take on the technological challenge of providing electronic facilities. To date, companies have been encouraging their shareholders to submit proxy votes, and companies may prefer in practice to continue with this approach.

In view of the temporary restrictions placed on members’ rights, companies will need to consider how they continue to provide shareholder engagement in the circumstances. The Financial Reporting Council has recently updated its Q&A in this regard, see our briefing here for further details of their best practice guidelines for companies to consider.

Useful links

Corporate Insolvency and Governance Act 2020

Companies House Guidance: Changes for public companies

ES Briefing: Corporate Insolvency & Governance Bill (corporate aspects) (22 May 2020)

ES Briefing: Coronavirus – FRC publishes guidance on best practice for holding AGMs (10 June 2020)

Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020