With the safe distancing and circuit breaker measures in place, companies and corporations in Singapore are experiencing increasing difficulties when conducting general meetings for shareholders.
On 7 April 2020, the Parliament passed the COVID-19 (Temporary Measures) Act 2020 (“Act“), which codified the stricter circuit breaker measures. The measures introduced under the Act include, among other measures, temporary measures for the conduct of meetings. In furtherance of Part 4 of the Act, the subsidiary legislation, COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020 (“Order“) was published in the Government Gazette on 13 April 2020, to provide further clarification on the alternative arrangements for meetings for the different types of entities.
This article focuses on the alternative arrangements for the convening, holding, conducting or deferring a meeting of shareholders of companies in Singapore.
Alternative arrangements to meetings
As Singapore tightens its borders and isolates imported cases, there has been a concerted effort in Singapore to prevent the further spread of COVID-19 in the local community. In view of this, the Multi-Ministry Taskforce has introduced strict safe distancing measures to limit close contact and large gatherings of people in close proximity over a prolonged duration. To give legal force to these safe distancing measures, the Infectious Diseases (Measures to Prevent Spread of COVID-19) Regulations 2020 came into effect on 27 March 2020 (“Regulations“). Thereafter, in an elevated set of safe distancing measures, the Multi-Ministry Taskforce implemented circuit breaker measures on 3 April 2020 to pre-empt the trend of increasing local transmission of COVID-19.
With the safe distancing and circuit breaker measures in place, companies and corporations in Singapore are experiencing increasing difficulties when conducting general meetings for shareholders. Attendance for non-prohibited events under the Regulations are limited to 10 individuals, provided safe distancing measures are put in place for non-prohibited events held in public places. As part of the circuit breaker measures, workplaces were also required to implement telecommuting arrangements for their employees, which added a layer of difficulty in organising general meetings for companies with a large number of shareholders.
On 7 April 2020, the Parliament passed the COVID-19 (Temporary Measures) Act 2020 (“Act“), which codified the stricter circuit breaker measures that largely replaced the measures under the now-revoked Regulations. The measures introduced under the Act include, among other measures, temporary measures for the conduct of meetings. In furtherance of Part 4 of the Act, the subsidiary legislation, COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020 (“Order“) was published in the Government Gazette on 13 April 2020, to provide further clarification on the alternative arrangements for meetings for the different types of entities.
Under Part 4 of the Act, which comes into effect retrospectively on 27 March 2020 (being the date the Regulations came into effect), companies are permitted to make alternative arrangements for meetings. These alternative arrangements will be upheld as long as it is inexpedient or impracticable for the meeting to be held in the usual manner provided under the constitutional documents due to control orders, regulations, and other notices related to COVID-19 that are in place. The transitional arrangements will also apply to general meetings where the notice of the meeting was sent during the control period. As the arrangements are permissive and not mandatory, companies can continue to hold meetings in the usual manner if their constitutional documents allow for it.
For the purposes of this article, we will focus on the alternative arrangements for the convening, holding, conducting or deferring a meeting of shareholders of companies in Singapore. The Act and the Order also apply to general meetings of variable capital companies, meetings of classes of members of variable capital companies holding shares in respect of a sub-fund, general meetings of unitholders of registered business trusts, meetings of unitholders of relevant unit trusts, and meetings of debenture holders for debentures governed by Singapore laws, and meetings held under the Societies Act, Co-operative Societies Act, Education Act, Mutual Benefits Organisations Act, Town Councils Act, and Trade Unions Act. Meetings held in relation to schemes of arrangement are expressly prohibited from relying on the alternative arrangements available under the Act and the Order.
Summary of alternative arrangements for general meetings of a company during the control period
The key alternative arrangements for a general meeting of a company under the Order are summarised below:
Conduct of meeting: A meeting can be convened, held or conducted by electronic means, at no costs to the members of the company.
Attendance at meeting: Companies may provide for members to attend a meeting by electronic means, if such access is provided to the member. A member is electronically present at a meeting if a member (i) attends the meeting in the manner provided by the Company, (ii) is verified by the share registrar of the company to be in attendance, and (iii) is acknowledged by electronic means by the chairman of the meeting to be present at the meeting.
Notice of meeting: A notice of meeting may be sent to its members by electronic means, as long it contains information on the following: (i) the means by which the meeting can be electronically accessed, (ii) the manner in which the chairman of the meeting may be appointed by a member entitled to vote; and (iii) the manner in which a member may provide questions or matters to be raised at the meeting and the relevant cut-off time within which questions must be submitted. The notice of the meeting must also be published on the company’s website (if available).
Quorum: A quorum may be formed by two members (or one member, if permitted by the constitutional documents of the Company), personally or electronically present.
Provision of questions or matters to be tabled: A company may require members to provide questions or matters that they wish to raise at the meeting prior to the meeting by way of post or electronic mail. If the questions are substantial and relevant and sent within a reasonable time prior to the meeting, the company should endeavor to respond to the question at or before the meeting.
Voting at meetings: Members are to vote only by proxy through the chairman, and a company may require a member to appoint the chairman of the meeting as his proxy to vote at the meeting. For instruments of proxy delivered before 13 April 2020, the company may treat the instrument of appointment of a proxy other than the chairman of the meeting if the member had clearly indicated how the member wished to vote on each such resolution, and the member had been given an opportunity to withdraw the appointment and has not done so within the specified time.
Minutes of meeting: For companies listed on the Singapore Exchange (“SGX“), the minutes of the meeting must be published on SGXNET and the website of the listed company within one month after the date of the meeting.
Exemption for key persons to be present at the same physical location: The Ministry of Trade and Industry has also clarified that they will be granting an automatic time-exemption to permit temporary operations at the same physical location, provided that the number of persons do not exceed six, with safe distancing measures in place. This is to allow for certain essential persons to be present at the same physical location to facilitate the conduct of the virtual meeting.
Extension of time
Holding of annual general meetings (AGM): On 7 April 2020, it was announced that Singapore incorporated companies (whether listed or unlisted) whose AGMs are due between the period 16 April 2020 to 31 July 2020, have been granted a 60-day extension of time. As the extension of time will be provided automatically, companies are not required to make an application to Accounting and Corporate Regulatory Authority of Singapore (“ACRA“) or Monetary Authority of Singapore (“MAS“).
For companies listed on the SGX, the Singapore Exchange Regulation (“SGX RegCo“) will also provide time extensions to listed companies with 31 March 2020 financial year-end in order for them to hold their AGM by 29 September 2020. Issuers are required to notify SGX RegCo on their indicative timeline to convene the annual general meeting, and announce the same on SGXNet.
Filing of annual returns: The annual return filing due dates for the period of 1 May 2020 to 31 August 2020 for all Singapore incorporated companies will be extended for 60 days for all listed and non-listed companies. There is no need to apply for the extension of time with the ACRA.
Issuance of annual reports by listed companies: Issuers on SGX must issue their annual reports to shareholders and SGX at least 14 days before the date of the AGM. It should be noted that issuers whose last financial year ended 31 December 2019 will nonetheless be required to issue their annual reports by 15 April 2020.
Checklist for companies
On 13 April 2020, ACRA, MAS and SGX RegCo had issued a joint statement to release a checklist for companies who wish to hold and convene meetings during the control period, where elevated safe distancing measures are in place. Both listed and unlisted entities holding their general meetings are strongly encouraged to refer to the checklist, if they wish to adopt the alternative arrangements for the conduct of general meetings.
As the COVID-19 situation continues to develop, it is important to ensure that corporations continue to operate, while ensuring that their officers, members and stakeholders can remain in compliance with the necessary safe distancing measures. These alternative arrangements are helpful in allowing flexibility in conducting and convening corporate meetings, while providing assurance to the propriety of these meetings. This is also a good opportunity for companies to review their constitutional documents and evaluate whether these alternative arrangements should be incorporated into their constitutional documents for future corporate meetings even beyond the COVID-19 pandemic.
Choon Leng is a highly regarded Corporate M&A and Private Wealth lawyer and leads JurisAsia's Corporate Practice.