Corporate Insolvency and Governance Act 2020: What's changed for companies?
The Corporate Insolvency and Governance Act 2020 (the Act) came into force on 27 June 2020
The Act is designed to give companies the greater flexibility needed as a result of COVID-19. This article focuses on the changes to the procedures for holding an Annual General Meeting (AGM) and to Companies House deadlines; but note the Act also implements measures relaxing the insolvency regime to give companies some breathing space during uncertain operating conditions.
Public companies are required to hold an AGM within six months of the end of their accounting period, and to file their accounts within the same timeframe, and private companies may also be required to hold AGMs by their articles of association (Articles). The Act seeks to relax requirements in light of the current challenges posed by restrictions on movement and gatherings.
The changes to AGMs and other general meetings of shareholders apply retrospectively from 26 March 2020 until 30 September 2020 (the Relevant Period), although the Secretary of State will have the right to shorten the Relevant Period or extend it as far as 5 April 2021.
During the Relevant Period, the following changes will apply and will override any contradicting provisions of a company's Articles:
- Any company that would normally be required to hold its AGM during the Relevant Period will now be entitled to hold it at any time before the end of the Relevant Period.As things currently stand, meetings will need to be held before 30 September 2020. However, please note that if the AGM has already been convened it cannot be postponed unless the Articles permit this.
- AGMs need not be held at any particular place (for example, as specified in a company's Articles).
- AGMs may be held, and votes may be cast, by electronic or other means.
- AGMs may be held without any number of those participating in the meeting being together at the same place.
- Shareholders will not have the right to attend an AGM in person, to participate in the meeting other than by voting, or to vote by any particular means.
Now could be a good time for companies to review the existing provisions relating to general meetings in their Articles. For example, companies might consider aligning their AGM procedures better with modern technology after the Act ceases to apply. In the wake of the COVID-19 pandemic, shareholders and boards alike may wish to switch permanently to holding "hybrid" AGMs which allow shareholders to join via electronic means rather than requiring physical presence.
Guidance published by the Financial Reporting Council relating to AGMs during the COVID-19 pandemic can be found here.
Companies House filing deadlines
The Act also permits the Secretary of State to extend deadlines for certain filings – these are contained in regulations which also came into force on 27 June 2020. Companies House guidance published on 1 July 2020 gives clear guidance on the various relaxations, which include the following:
Companies will be granted an automatic three-month extension to file their accounts if their filing deadline falls between 27 June 2020 and 5 April 2021. The three-month extension will start from the company's original filing deadline, rather than any extension already granted. Companies can view their new filing deadline using the Companies House service website.
- Confirmation statement
Normally, companies are given 14 days from the end of their review period in which to file their confirmation statement. Under the new Regulations, this is automatically extended to 42 days.
- Event-driven filings
The period for delivery of forms notifying Companies House of changes such as to director details, PSC information and registered office address will increase to 42 days. The period allowed to deliver the particulars of a charge will increase to 31 days for charges created on or after 6 June 2020.
The usual Companies House telephone enquiries line is not in operation currently and all enquiries should be sent by email to firstname.lastname@example.org. The same-day filing service is also suspended.
Companies are encouraged to use the online filing service where possible given the paper processing service is slower than usual. Companies can register for Webfiling but should note that the Webfiling code will be sent to the registered office of the company.