In line with the need to address the impact of the COVID-19 pandemic outbreak on the Nigerian business environment and corporate governance in Nigeria, the Corporate Affairs Commission (“CAC”) has issued guidelines for the conduct of Annual General Meeting (“AGM”) of companies by proxy.
The Commission noted that in view of the pandemic, companies can hold their AGM by taking advantage of the provision of Section 230 of the Companies & Allied Matters Act (“CAMA”) on the use of proxy especially public quoted companies as such companies have an average of 1,000 shareholders and an estimated 20% of said shareholders attend the AGM. This excludes representatives of regulatory authorities, professional advisors, independent observers and the mass media who usually attend the AGM.
This is to ensure that companies are in compliance with the directives of the Federal and State governments on minimising contact in order to curb the spread of the COVID-19 pandemic and also to ensure that corporate actions predicated on the AGM such as payment of dividends, election of audit committee members, filing of annual returns and approval of the fees of external auditors will not remain in abeyance as a result of postponement or cancellation of the AGM.
Section 230 of CAMA provides that:
“Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him, and a proxy appointment to attend and vote instead of a member shall also have the same right as the member to speak at the meeting”.
The rules on proxy allow shareholders to appoint personal representative or to appoint the chairman of the board or any presiding official or any of the directors of a company to act for them. The rules also allow shareholders to vote on the agenda or resolutions of the meeting ahead of the meeting date by indicating their vote on the proxy form.
The provisions of the guidelines published by CAC include the following:
1) The approval of the CAC shall be obtained before such a meeting is held. The application can be submitted to the Head Office in Abuja or any of the branch offices in any of the States.
2) The CAC shall send representative(s) as observer(s) to the meeting.
3) The meeting shall only discuss the Ordinary Business of an AGM as provided in S.214 of the CAMA.
4) Notice of meeting and proxy form shall be sent to EVERY member in accordance with the requirements of CAMA. Companies will be required to provide the CAC with the evidence of postage or delivery of such notices after the meeting.
5) All the members shall be advised in the notice that in view of the Covid-19 pandemic, attendance shall only be by proxy with names and particulars of the proposed proxies listed for them to select therefrom. The invitation shall be issued at the companies’ expense as well as the stamp duties which shall be prepaid by the company. The proxies need not be members of the company.
6) The company shall be guided by the provisions of its Articles or CAMA as regards to a quorum. However, for the purpose of determining quorum, each duly completed proxy form shall be counted as one.
Flowing from the above, the use of proxy will be an effective measure to circumvent the disruptions created by the COVID-19 pandemic on the Nigerian business environment and corporate Nigeria.
A couple of Public Companies have gone ahead and conducted AGMs virtually with few shareholders physically present. In our opinion this is a welcome initiative as it can be argued that the CAC Guidelines merely provide direction and do not in any way amend the existing provisions of CAMA.
For more information please contact:
Blackwood & Stone LP
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