CONVENING GENERAL MEETINGS FOR PUBLIC LISTED COMPANIES DURING COVID 19 PANDEMIC: BOWMANS UNLOCKS CONUNDRUM

By Evans Monari,Paras Shah,Terry Mwango,Richard Harney Thursday, April 30, 2020
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One of the biggest effects of the Covid-19 pandemic has been the restriction on public gatherings. This has disrupted a wide array of activities from social events such as weddings to religious ceremonies.

Business activities has not been left untouched. As a result of the restrictions, public listed companies are struggling to convenel meetings of their shareholders. This is because their articles of association which they have to comply with, anticipate that such meetings will be physical. We have previously shared an analysis of the legal issues arising from these restrictions, and the guidance published in that regard by the Capital Markets Authority (CMA), here.

In our note, we highlighted the power of the High Court to allow a company to hold a general meeting in circumstances where it is impractical for the Company to comply with the provisions of its articles in this regard.

Late this month, we were presented with the opportunity to test our advice. WPP Scangroup Limited (Scangroup) a company listed on the Nairobi Securities Exchange needed to convene a shareholder meeting urgently to consider a proposed disposal. Like those of most other companies, the articles of Scangroup anticipate general meetings of shareholders to be physical meetings.

On the instructions of Scangroup, we moved to court on April 20, 2020, and filed Miscellaneous Application No.E680 of 2020 seeking leave of the Court under section 280 of the Companies Act, 2015 for Scangroup to hold an extraordinary general meeting (EGM) through electronic means. In the application, we joined the CMA as an Interested Party, in its capacity as the protector of the interests of investors, to the suit.

Pursuant to a consent adopted as an order of the High Court on 29 April 2020, the High Court HAS granted Scangroup its prayers. Recognizing that the pandemic affects all listed companies the High Court has gone further to allow companies listed on the Nairobi Securities Exchange to hold shareholder meetings using alternative means.

A listed company wishing to rely on this order needs to obtain a “no objection” from the CMA before issuing notice of the meeting. In the request to the CMA for the no objection, such company is required to describe the alternative means and demonstrate that this will not prejudice shareholders.

The full text of the order of the High Court can be found here.   

We are pleased to have advised WPP Scangroupwhat email Plc on this matter and to have facilitated a solution to this problem for all our public listed companies