AGMs are important events for companies and their shareholders because they provide an opportunity for the board of directors to report on the performance and future plans of the company. Shareholders will also be able to clarify any issue regarding the company at the meeting. However, the physical meeting where directors and shareholders attend in person may not be ideal in all situations. Hence, the concept of virtual AGM is being introduced to provide an alternative arrangement for AGMs in today’s technologically driven world. In virtual AGMs, technology such as live webcast or video conferencing will be used to facilitate the meeting. These technological features allow for two-way communications so that shareholders, whether attending physically or virtually, can listen and ask questions as if they are in a real physical meeting. As such, companies can now choose to conduct virtual AGM instead of traditional physical AGM, subject to the company’s constitution allowing it and the fulfillment of certain requirements spelled out in the relevant laws.
Background on Virtual AGMs
Historically, companies have been required under the Companies Act to hold annual general meetings (“AGMs”) at physical locations in Singapore. This requirement was intended to provide a defined period after the end of each financial year for the directors to present the financial statements of the company to the shareholders for their approval, and for the shareholders to put questions to the board on the financial position and prospects of the company while considering the latest financial statements. For example, a company must hold an AGM no later than 6 months after the end of its financial year, and the financial statements must be laid before the company at the AGM. However, the requirement to hold physical AGMs posed challenges during the Covid-19 pandemic period when safe distancing measures implemented by the Singapore government made it difficult for companies to hold physical AGMs in compliance with those measures. The convergence in interests of promoting safe distancing and enabling companies to fulfill their obligation to hold AGMs led to the development and implementation of the Virtual AGM framework that is addressed by the recently passed Covid-19 (Temporary Measures) (Amendment No. 3) Act 2020, and other amendments to the Companies Act which took effect on 15th May 2020. The Covid-19 (Temporary Measures) (Amendment No. 3) Act 2020 amended the definition of “meeting” in the Companies Act to expressly provide for virtual meetings, unless the constitution of the company expressly excluded that possibility. In light of the evolving situation of the Covid-19 pandemic, the government has also included provisions to enable the Minister for Health to make regulations prescribing additional temporary measures with respect to the holding of meetings, including the flexibilities under the Virtual AGM framework.
Purpose of the Virtual AGM
The primary aim of a virtual AGM is to offer an alternative venue for shareholders to be able to participate and observe in a meeting without the need to be physically present in the same location as the meeting. By providing for a virtual AGM in the Companies Act, it would modernize the conduct of meetings for companies and reflect the digitalization of the economy. In addition to facilitating greater convenience and accessibility for shareholders to participate in company meetings, the use of technology in the conduct of meetings such as virtual AGMs could also provide a means to better facilitate participation and engagement for persons who may be overseas. This would be especially useful for companies who have a diverse shareholders base and/or where the company is listed on the Singapore Exchange. The use of technology such as a virtual AGM could also enable companies to communicate more effectively and regularly with their shareholders. By moving away from the traditional form of physical shareholders meetings, a company would have the flexibility to convene a meeting as and when necessary to address urgent issues, even in a very short period of time, without being constrained by the need to find a physical venue and giving the requisite notice of meeting that the law currently requires. The change from a physical venue to a virtual AGM would also be advantageous for companies as costs such as rental of a physical venue, the engagement of a chairman to preside over the meeting, and the presence of a court interpreter for non-English speaking shareholders could be minimized or avoided. Such savings could be passed on to shareholders or would have an impact on the company’s resources. For example, the resources saved could be redirected to develop or enhance the digital platform used for the virtual AGMs. Overall, the option for virtual AGMs provides a more robust legal framework that would facilitate innovative methods of communications for companies and at the same time, ensure that the interests of the shareholders in having a meaningful opportunity to participate and engage in company meetings are maintained. This is in line with the broader objectives of the amendments made to the Companies Act to improve the transparency of companies and enhance engagements with shareholders.
Scope and Applicability
In section 1.3, the article explains that the scope and applicability of virtual AGMs are provided for in the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings) Order 2020. According to the article, this order applies to a wide range of entities, including companies formed and registered under the Companies Act, limited liability partnerships formed and registered under the Limited Liability Partnerships Act, variable capital companies, and registered business trusts. Nevertheless, the applicability of the order, as explained in the article, is subject to two key conditions. First, the relevant entity must have a constitution or other similar instruments, which would typically include provisions governing the convening and holding of general meetings. Secondly, regardless of what is provided in the entity’s constitution or other similar instruments, a general meeting may be conducted wholly by electronic means only if the entity’s relevant governing body, which according to the article would typically refer to the board of directors or its equivalent, authorizes it. This means that virtual AGMs are not just relevant to companies and other business entities that are incorporated in Singapore. In fact, the article provides that foreign companies that are registered under the Companies Act are also eligible to take advantage of the alternative arrangements for meetings that are provided for in the order. This includes not just companies that are administered and regulated by MAS, but also companies that are present in the various sectors whose activities are regulated by different government authorities.
Temporary Measures for Virtual AGMs
The Ministry of Law implemented the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020. The Order was to alleviate the uncertainty and ensure compliance with statutory requirements during the COVID-19 pandemic by allowing entities to leverage technology in conducting meetings. The COVID-19 Order provides for a range of activities to be carried out by electronic communication or by the use of electronic or digital means. Firstly, it allows for virtual and hybrid AGMs, for which physical general meetings were required under prescribed arrangements. Members must have a reasonable opportunity to participate and vote in the meeting. For instance, the Meeting Notice must allow for the technology. The validity requirements of a virtual AGM are deemed to be met if the meeting is held through a live audio-visual webcast that allows members who are not physically present at the meeting to communicate concurrently with other participants and to vote in the meeting. Moreover, under a virtual AGM where a poll is taken, the chairperson of the meeting provided in the constitution must also be conducted via a live audio-visual webcast displayed at a place in Singapore. The COVID-19 Order also governs the conduct of electronic general meetings without the need for a physical meeting, provided that the entity has the necessary technological requirements to facilitate the electronic transmission of the live proceedings of the meeting to all members concurrently. The Order streamlines the processes to opt for notifications and services by electronic means for members who do not wish to receive documents in hard copy. For instance, Members’ Voluntary Liquidation proceedings notices and services can be transmitted through electronic means.
COVID-19 Temporary Measures
Section 2. Temporary Measures for Virtual AGMs The COVID-19 (Temporary Measures) Act 2020 was enacted in Singapore on 7 April 2020. This Act introduced various temporary measures in different areas of law in Singapore to help alleviate the impact of the COVID-19 pandemic. These measures are mostly aimed at providing temporary cash flow relief and protection against legal and enforcement actions to businesses and individuals who are unable to fulfill their contractual obligations due to the COVID-19 pandemic. Under the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020, it is stated that any provision of a written law, a company’s constitution or any other document that requires or permits a meeting, including an annual general meeting (AGM) of the company to be held, may be satisfied by electronic means, subject to certain conditions. This means that the management of a company in Singapore such as the directors of the company, may, for example, in accordance with the company’s constitution, a board resolution or the Companies Act, authorize or otherwise make arrangements for a general meeting to be held by electronic means. If this is to be done, the directors may determine the kind of electronic communication to be used and make such arrangements as they consider appropriate for the persons entitled to attend the meeting to be allowed to observe, and where relevant, to participate in the proceedings of the meeting. This Order applies to companies, variable capital companies, business trusts, unit trusts and debenture holders under the respective written laws.
Amendments to the Companies Act
Another temporary measure introduced by the Act is the amendment to Section 88 of the Companies Act. Section 88 provides that AGMs and other meetings may be held at two or more places provided that the technology to enable the meetings to be held at those places is made available. The amendment to the Act now provides that, regardless of what is stated in the company’s constitution, all or any of the members of the company may demand that a meeting be held at one place only. Consequently, to dispense with physical AGMs in their entirety or to use electronic means to conduct any general meeting, a company’s constitution will need to have provisions to allow for this. Many companies’ constitutions, especially those of private companies which have not been amended for some time, still contain provisions requiring AGMs to be conducted in relative physicality. It is important to note that if the rules in the constitution are silent on how general meetings are to be conducted and the members cannot agree how to conduct such meetings, the default position under the Act is that the meeting will have to be held at a physical location. However, the Act empowers the courts to declare that a general meeting of a company may be conducted using any technology to allow members to participate and vote in the meeting. This is the case even though the company’s constitution does not provide for this, if the court is satisfied, on the application of a director, secretary or member of the company, that it is in the interests of the company to do so. This additional flexibility is useful, especially for dormant or insolvent companies, as it may be difficult for the members to pass a resolution to amend the constitution before a general meeting can be held.
Role of Monetary Authority of Singapore (MAS)
Mas issued a guidance for the conduct of virtual general meetings on 13 April 2020. In this document, it is said that listed companies holding annual general meetings during the period 27 March 2020 to 30 June 2020 may conduct their general meetings by electronic means. Physical attendance is not required if the company has provided alternative arrangements for live audio stream. Investors also can raise questions and the board of directors can address them either through the live audio stream or by post. However, companies that have already sent their notices for physical meetings or have not yet issued their notices will need to issue new notices to inform the members of the alternative arrangements. This is if the company is required to inform the members the date and time of the general meeting or the place. On 29 May 2020, Mas announced that the alternative arrangements for the holding of general meetings applies to general meetings of companies, which are required to be held on or before 31 December 2020. Furthermore, the listed and unlisted companies which are not required to hold general meetings, but are holding annual general meetings during the period 1 April 2020 to 31 December 2020 are also allowed to hold the general meetings by electronic means. This means that the alternative arrangements would not only apply to the mainboard and the full list of the Singapore Exchange Securities Trading Limited (“SGX-ST”) and also the listed entities in Singapore. Mas also gave the flexibility to real estate investment trusts (“REITs”) and business trusts whose financial year ends on a date falling on or before 31 December 2020 to hold virtual annual general meetings as long as the annual general meetings are held within a period of 6 months, after the end of their financial year. Residents’ Committee and the Community Improvement Projects Committee are also allowed to hold their general or extraordinary meetings during the period 27 March 2020 to 30 June 2020 by means of video conferencing or other electronic communication. On 10 July 2020, Mas has again updated the guidance for the conduct of virtual meetings and the alternative arrangements for the holding of general meetings applies to general meetings of companies, which are required to be held on or before 31 December 2020. Residents’ Committee, School Management Committees and the Community Improvement Projects Committee are allowed to hold their general or extraordinary meetings during the period 27 March 2020 to 31 December 2020 by means of video conferencing or other electronic communication. This reflects the changes to the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Charities, Co-operative Societies, Precinct Election, Etc.) (Amendment) order 2020. These measures will provide the relevant entities with legal certainty and the flexibility in organising their general meetings, while minimising the need for physical interaction during the COVID-19 pandemic. Mas has worked closely with the Ministry of Law to make sure that the alternative arrangements can be extended to charitable organisations, co-operative societies, mutual benefit organisations and precincts at general election for the COVID-19 response. This reflects Mas’s commitment in ensuring that our regulatory requirements and guidance remain up to date and relevant in the fast evolving financial sector. By providing alternative arrangements for the holding of general meetings, it can also help to mitigate the risk of community spread of the COVID-19 virus that may arise from large scale physical meetings. This is aligned with the guidance from the Ministry of Health which encourages organisers to cancel or defer large-scale events and scale down smaller events and meetings.
Virtual AGM Procedures
Finally, the article focuses on the procedures for virtual AGMs, which generally refers to the method in which business is conducted during the general meeting. Firstly, it sets out effectively how members can communicate with each other and the chairman. Then, it outlines the different types of virtual AGMs, such as real-time virtual meeting and fully virtual meeting. For real-time meeting, the meeting has to have a provision for two-way communication, and the chairman shall announce his intention to take and deal with questions. As for fully virtual meetings, it mentions the deemed receipt of the notice, and the requirements for the content of the notice. Lastly, the article talks about the order of virtual general meetings. The chairman has the duty to announce how a poll can be demanded and the voting can be cast during virtual polls. It highlights the right to appoint a proxy and the procedures of demanding a poll be insisted during the virtual general meetings. The regulatory framework and compliance for virtual AGMs are highlighted, including the involvement of the Accounting and Corporate Regulatory Authority (ACRA), Singapore Exchange Regulation (SGX RegCo), and Bodies Miscellaneous Amendments. The article describes virtual AGMs as the meeting of members of a company at which members are not all physically present at the same place. Also, the company’s constitution can allow for virtual general meetings, which means the members do not need to be in the same physical place, although the general meetings still have to be conducted in real time.
Real-Time Virtual Meetings
It is noted in paragraph 29 that a “real-time virtual meeting” is a virtual general meeting that takes place at the same time for all members in the form of a live broadcast over the internet. It is chaired and conducted by a chairman who is physically present in Singapore. During a real-time virtual meeting, the chairman will announce the start and end of the poll, if any, and members may vote by electronic means or by appointing the chairman of the meeting as their proxy to vote. It is highlighted in paragraph 32 that if a poll is demanded by members, the chairman will announce at the real-time virtual meeting the period during which members may vote. The chairman will also announce the start date and time, and end date and time of the poll. Such information in relation to the poll will also be included in the notice of the meeting and the notification that is published on the company’s website. The requirement for a “hybrid real-time virtual meeting” is provided in paragraph 33. In a hybrid real-time virtual meeting, the meeting is conducted in two or more places and those places are linked by audio or audio-visual means which enables persons in different places to communicate with each other. The meeting is still treated as taking place at the place where the chairman is located and the meeting is chaired and conducted by the chairman who is physically present in the place. It is highlighted in paragraph 37 that the approval of all the members required to pass a resolution at a general meeting may also be obtained by way of a written resolution under section 199A of the Companies Act. This provides for more flexibility as the members may cast their vote without having to wait for a general meeting to be convened. However, a written resolution may not be used to remove an auditor from office under section 201(2) of the Companies Act.
Fully Virtual or Hybrid Meetings
A fully virtual general meeting is one in which all shareholders participate in the meeting through electronic means. No shareholders are at the physical location of the meeting. In a hybrid general meeting, on the other hand, some shareholders are present and holding the meeting at a physical location. It is conducted partly with the help of electronic means and partly at the physical location. The requirements to hold either a fully virtual or hybrid general meeting are set out in section 361CA of the Companies Act. The constitution of the company can provide that general meetings shall be held only by way of fully virtual meetings or by way of hybrid meetings, subject to compliance with the requirements in the Companies Act. It can also give the directors the power to decide whether to hold general meetings by way of fully virtual meetings or hybrid meetings. In the absence of such a provision, general meetings can be held by way of fully virtual meetings or hybrid meetings in accordance with the regulations and the company’s constitution. Any technology may be used as long as it enables the meetings to be held in a manner which allows the chairman and every other person speaking to hear each other. This allows for a smooth and efficient conduct of the meetings. The technology used must also allow for the identification or authentication of all the participants and the recording of the meetings. This is to ensure that the integrity of the meetings is maintained. The technology used in a general meeting must also enable the shareholders to have a reasonable opportunity to participate, which includes the facility to vote and submit questions as well. A notice of a fully virtual general meeting must state that the general meeting is to be held as a fully virtual meeting and no other. On the other hand, a notice of a hybrid meeting must state that the general meeting is to be held as a hybrid meeting and give details of the place, if any, and the technology that will be used. Also, the notice and the technology used must allow shareholders who are participating in the meeting by electronic means to be able to hear and to be heard by all other participants at the meeting. Qualified privilege, as compared to absolute privilege, is a more restricted form of privilege. It is available in certain situations where the person publishing the statements has a legal, social, or moral duty to publish the statement and where the recipient has an interest in having the statement published to him. The law on qualified privilege has moved on from what was traditionally known as a duty.
Order of Virtual General Meetings
The new section 88A (1), which was introduced in the Companies (Amendment No. 2) Act 2007, provides the order of business at a general meeting convened by the directors. Under section 88A(4), the first two items on the agenda, namely the notice of meeting and the declaration of interest, must be dealt with immediately upon the commencement of the general meeting. The third and fourth items on the agenda, namely the address by the chairman and the minutes of the last general meeting, must be dealt with immediately after the first two items have been dealt with. However, the chairman will have discretion to rearrange the matters upon which the members of the company are entitled to speak, and the chairman may also end discussion on any matter and insist that the matter be put to the vote at once. At a virtual general meeting convened under section 88A, it is usual for the chairman of the meeting to introduce himself and to confirm that the definition of ‘video conferencing facilities’ in section 2(1) of the Companies Act has been complied with, that is to say, audio-visual means that allow persons participating in a meeting to see and hear each other. It is also normal for the chairman to confirm that voting rights are properly authenticated and that the meeting is now properly constituted for the members to commence voting. This is in line with the new section 88A (5) introduced by the Companies (Amendment No. 2) Act 2007. After the chairman’s address, the minutes of the last general meetings of the company should be dealt with pursuant to section 88A (1), and section 88A(2) requires the contents of the minutes to be recorded immediately after the date of the minutes. The chairman must also satisfy himself that minutes kept as required by the Companies Act have been so kept and that any matter found in the course of the last general meeting to have been deferred for consideration at another subsequent meeting or where a resolution was not put to the vote and was deferred to the last meeting must also be minuted. Finally, a certificate that the contents of the minutes on the chairman’s declaration were recorded as required, as mentioned earlier, must be signed by the chairman of the meeting or by another director of the company duly authorized by the chairman.
Regulatory Framework and Compliance
Before you can consider the legality and practicality of holding a virtual AGM, you have to know the regulatory framework and statutory compliance issues that arise from such arrangements. And that is the question section 4 of the above-mentioned guide how to answer. Well, according to the high level of requirements that should be met when an AGM may be conducted in such a virtual environment, largely provided in both the Companies Act and the Constitution of a company. First and the most important thing in the regulatory requirements are the location in which the meeting is held, set out in section 174(1) of the Companies Act. Under this section, when they say it is the general meeting, which means all the members have to be together in the same place. However, where the Act provides of governing the company provide for a meeting may be held by electronic means, such as by video conferencing mode, such meeting shall be considered as a valid meeting. In that case, every meeting notice should specify that the meeting will be conducted by such a mode and the notice shall also include the details of such electronic means. Like conducting an ordinary meeting, the written notice required of a virtual AGM must be served to the members, the auditor and every director of the company at least 14 days before the meeting in order to fulfill the requirements of section 187(4) of the Act. After the meeting notice sent out, every member has the legal right to know about the details of the meeting notices. Such details must be shown on the website of the company and the website address shall be specified in the notices. The details including the confirmation of the receipt of the meeting notice, the agenda of the meeting, the members’ rights to appoint the proxy, the members’ rights to ask for the circulation of the resolution and the nomination for the appointment of the proxy. Of course, the members may require the circulation of the resolution agenda, either by member’s resolution or director’s resolution. But due to practical point of view, it is very difficult to remove the barriers of conducting a virtual meeting, so the conclusion is we may not see the casual use of the virtual AGM after the lifting of the COVID-19 situation. And currently, the general method is still the completion and execution of paper form powers of attorney.
Accounting and Corporate Regulatory Authority (ACRA)
The responsibilities of the Accounting and Corporate Regulatory Authority (ACRA) in overseeing the compliance of companies with the Companies Act were also highlighted in the article. Under the Companies Act, companies are required to lodge certain information with ACRA. This would include the disclosure of the company’s registered office, the particulars of company officers, charges relating to shares and debentures of the company, and any changes made in the constitution of the company. However, ACRA had recognized that the requirement for companies to hold AGMs physically may pose a real challenge. As a result, ACRA worked closely with the Ministry of Finance to provide an alternative through legislative changes to offer greater legal certainty to both businesses and the government in the conduct of meetings. Amendments to the Companies Act were introduced as part of the COVID-19 (Temporary Measures) (Amendment) Bill. By way of the COVID-19 (Temporary Measures) Act 2020 that was enacted on 7 April 2020, companies are now allowed to conduct general meetings, including AGMs, by electronic communication. More importantly, an entirely virtual AGM without the need for shareholders to be present in the same physical location was made possible. In addition to the amendments under the COVID-19 (Temporary Measures) Act 2020, the COVID-19 (Temporary Measures) (Amendment) Bill that was passed in Parliament on 5 June 2020 introduced new temporary measures to further alleviate the practical difficulties faced by companies. For instance, companies that are mandated by their constitution to hold AGMs are allowed to convene and conduct their AGM by electronic communication mode, notwithstanding that the company’s constitution does not provide for it. In view of the COVID-19 pandemic, the threshold for the number of days’ notice required for the given written resolutions to be passed by members has also been shortened from 14 days to 10 days. This ultimately allows the company to seek decisions from its members in a more timely manner.
Singapore Exchange Regulation (SGX RegCo)
SGX RegCo is joining forces with the other regulators in responding to the rapid market developments, and it is encouraging to see that a considerable number of companies had already held general meetings by last year. With the proposed establishment of a new electronic holding and subsidiary management facility by ACRA and the streamlining of the procedures for the verification of members’ mandate, virtual AGM could be conducted even more efficiently when all these initiatives are materialized. I believe that the industry will continue to embrace technology and digitalization in the post-pandemic era, and the regulators will definitely introduce more measures to accommodate these advancements. The guidance issued by SGX RegCo has certainly facilitated the smooth transition of the virtual AGM in listed companies.
With the emergence of virtual AGM and the increasing trend of listed companies adopting virtual AGM, it is crucial for SGX RegCo to provide guidance and introduce measures to ensure that the requirements of the listed companies and the legitimate interests of the shareholders are met. In light of this, SGX RegCo issued guidance in the form of Frequently Asked Questions on 17 April 2020, offering practical assistance on how companies can adopt technology to conduct general meetings and how the requirements under the listing rules can be complied with. It is important to note that all the listed companies shall, among other things, provide technology infrastructure and an electronic platform which can facilitate as many members as possible to participate in the meeting.
Singapore Exchange Regulation, commonly known as SGX RegCo, is appointed under the Securities and Futures Act, and it is also a governing body for the listing and market regulations in Singapore. SGX RegCo operates the Mainboard and the Catalist, two local exchanges in Singapore. The vision of SGX RegCo is to become a leading and trusted regulator in Asia, and its primary functions are to enforce the securities and listing rules and ensure that the market is fair, orderly, and transparent. SGX RegCo also assumes the responsibility of monitoring and supervising the market activities and corporate disclosure practices so as to uphold the interests of the investors.