High Court Directions on Holding of General Meetings by Public Listed Companies During The Covid-19 Pandemic
Further to our article on how to conduct virtual board and shareholders meeting during the Covid-19 Pandemic, the High Court of Kenya issued an Order on 29th April, 2020, by virtue of powers bestowed on it by Section 280 of the Companies Act, 2015 directing the manner in which public companies listed on the Nairobi Securities Exchange may conduct general meeting in the event it is impracticable to conduct the same as required by its Articles of Association due to the restrictions on public gatherings and social distancing imposed on account of the ongoing Covid-19 pandemic and related public health laws, regulations and directives.
In the Miscellaneous Application Number E680 of 2020; the court directed that any public companies listed on the Nairobi Securities Exchange may hold their general meetings using virtual/electronic technology or hybrid means. The Court ordered that such listed companies should request for a No Objection letter from the Capital Markets Authority (Authority) at least 14 days prior to the issuing of statutory notices to its shareholders.
The request by the listed company must demonstrate to the Authority that its shareholders have been provided with:
- Notice of the general meeting as provided for under the Companies Act, 2015;
- information to make informed decisions on any resolutions placed before them;
- opportunity to ask any questions and seek any clarification that they require from the directors;
- an opportunity to vote with the voting procedure made clear to them;
- other grounds as may be deemed appropriate in the circumstance.
In addition, the No Objection request to the Authority should also set out the manner in which the public listed company intends to hold the general meeting e.g. through electronic or hybrid means. Any general meeting held by a listed company in accordance with the above directions will be deemed to be properly convened and conducted.
The High Court Order now provides guidance and clarity in the manner in which public listed companies may conduct their general meeting in the era of Covid-19 pandemic. This Order alongside other measures put in place by the government will go a long way in mitigating the effects of Covid-19 on the operations of companies in Kenya and ensure continuity of the operations of such listed companies.