As thousands queue overnight to get the new iPhone X, tech is still very much on people's minds. How can you use tech to make your life easier whilst running a business? We all know what it is like when you are busy - do you really want to sit in a boardroom for a few hours, is there a more streamlined approach?
Virtual board meetings (where there is no physical meeting place) are not particularly new, but are something that is not always thought about.
There is no legal reason why a meeting cannot take place in several different places. Electronic meetings are permitted providing the people attending the meeting can attend, speak and vote at the meeting. In practical terms this means meetings can easily be held by telephone, skype or even a WhatsApp group.
In July 2016 Jimmy Choo PLC (the well-known shoe brand) held the UK's first electronic AGM, which opened the door for more innovative decision making. In doing this the meeting was open to all shareholders regardless of their physical location. The meeting was held through a conference call so shareholders could ask questions, and they had separate app and browser functionality so that shareholders could follow a presentation by management and vote. The rules were slightly stricter for Jimmy Choo as they are a traded company.
Smaller companies may not have the facilities to offer a meeting like Jimmy Choo but there is no reason why a company cannot take the virtual meeting idea forward. It may be that companies want to do this in steps. For example, a physical meeting could take place but shareholders can dial in via the telephone or Skype, and then once this works a fully virtual meeting (where no physical meeting is scheduled) can take place in the future.
A few things to think about before holding a virtual meeting include:
- Articles. Check your articles to ensure they permit holding meetings in electronic form, particularly if your company was in place before 2009. It may be that the articles don’t specifically prohibit the meetings but they may imply a physical place is needed i.e. by stating that the notice of a meeting must state the place.
- Consultation with shareholders. Some shareholders may not like the idea, particularly if there has been a long-standing tradition of well attended physical meetings.
- Technology. Do you have the tech to enable participates to both speak and vote? This could be as simple as Skype on your phone or arguably even a WhatsApp group or by text messages. Do you have someone who can help if the tech doesn't keep up? What happens if the tech fails?
- Notice. The notice of the meeting should contain clear instructions on how to access, speak and vote at the meeting, and make it clear that voting will be done on a poll. The proxy form may also need updating.
- Dry Run. It may be useful to have a dry run to check the tech is up to scratch and to clear up any queries before you need to run a 'proper' meeting.
- Usual rules apply. The usual rules regarding quorum (minimum amount of people who should attend), notice periods, documents and voting still apply and must be met.
- Written Resolutions. Remember that decisions can be passed by written resolution (usually unanimously) which may be more appropriate in some circumstances.
Regardless of what the articles say, can you hold meetings however you like? Lawyers on a corporate transaction (for example, if you ever want to sell the company), banks (if you want to obtain finance) and the courts (in the event of a dispute) will all scrutinise your articles and the way you make decisions. Also, directors failing to act in accordance with the articles are in breach of the duties owed by directors to their company.
In reality you may already be holding virtual meetings or agreeing to things by email without consulting the rules in your articles. However you need to be aware that the articles may place limits on you and your actions, and the dangers of failing to comply with them can be significant for both you (as the owners/directors) and the company.
If you would like to discuss this further or you are interested in amending your articles to allow for virtual details please do not hesitate to contact Jade Kent.