Introduction

In our previous article, we highlighted some measures that issuers can put in place in order to ensure compliance with the safe distancing measures released by the Ministry of Health (MOH) on 24 March 2020. In that article, we referenced the guidance jointly issued on 25 March 2020 (Guidance) by Singapore Exchange Regulation (SGX RegCo), Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA). The Guidance set out the expectation that issuers comply with the MOH’s mandatory safe distancing measures, and discussed proposed legislative amendments that would allow issuers the flexibility to, amongst other things, hold meetings solely by virtual means.

On 27 March 2020, the Infectious Diseases (Measures to Prevent Spread of COVID-19) Regulations 2020 (Regulations) came into force, which prohibited certain events and activities (such as conferences) and limited attendance for non-prohibited events to 10 individuals.

Since then, SGX RegCo, MAS and ACRA have updated the guidance for issuers on safe distancing measures when conducting general meetings (Updated Guidance), which was released on 31 March 2020. In addition, the Ministry of Law and the Ministry of Finance announced on 31 March 2020 (Announcement) that there will be upcoming legislative provisions to help entities who find it challenging or are unable to hold meetings where personal attendance is provided for, in any written law or legal instrument, in compliance with MOH’s safe distancing measures. On 1 April 2020, the SGX RegCo released its updated responses to certain Frequently Asked Questions (FAQs) in relation to the holding of general meetings.

This article explores the measures specified in the Updated Guidance, the Announcement and the FAQs, and how companies may rely on them to comply with both the Regulations and any other applicable requirements in relation to the conduct of their annual general meetings (AGMs).

Updated guidance on conducting general meetings

The Updated Guidance supersedes the guidance on the holding of general meetings that was previously issued by ACRA, MAS and SGX RegCo on 19 March 2020. As previously announced by SGX RegCo, issuers can defer their AGMs till after 30 April 2020. The Updated Guidance allows issuers that choose to proceed with general meetings before 30 April 2020, to be able to do so by certain means as discussed below. The Updated Guidelines, read with the previously issued guidelines, therefore provide two options an issuer can take with respect to holding its AGM.

1. Issuers can choose to defer AGMs

Issuers may defer AGMs until after 30 April 2020 for up to two (2) months, if the specified criteria and conditions are fulfilled. Issuers with a “31 December” financial year-end can seek a waiver in order to hold their AGMs any time up to 30 June 2020 (Waiver), which will be granted to issuers if they fulfil the following criteria:

1. their financial year-end (FYE) is 31 December 2019; and
2. they obtain approval of a similar application for extension of time by ACRA or other relevant regulatory authorities (where applicable).

Issuer seeking the Waiver must notify SGX RegCo: (i) that they wish to be granted the Waiver; (ii) how they have met the criteria; and (iii) the indicative timeline to convene their AGMs. Upon confirmation from SGX RegCo, issuers are required to announce:

1. the Waiver;
2. the indicative timeline to convene their AGM; and
3. confirmation of compliance with the Waiver conditions, which are as follows:

• the board of directors’ confirmation that the issuer has fulfilled the criteria;
• the board of directors’ confirmation that the Waiver will not be in contravention of any laws and regulations governing the issuer and its constitution (or the equivalent in the issuer’s country of incorporation); and
• issuance of the annual report to shareholders and the Exchange by 15 April 2020.

In order to ensure that shareholders continue to get information on a timely basis, issuers that wish to utilise the Waiver must continue to issue their annual reports to shareholders and the Exchange by 15 April 2020, and must also subsequently provide the requisite AGM notice of at least 14 days.

2. Issuers can choose to proceed with AGMs

An issuer may proceed with its AGM before 30 April 2020, and if it chooses to do so, it must ensure that the AGM is conducted in a manner that:

1. provides opportunity for shareholders to ask questions;

2. provides for the meeting to be shown by “live” webcast; and

3. allows for proxy voting.

The Updated Guidance further provides that any quorum requirements at these AGMs will be satisfied through (a) the attendance of the minimum number of shareholders specified in the issuer’s constitution (which may be satisfied through the attendance of any director or senior management holding shares), or (b) up to the number of individuals permitted under the Regulations (whichever is lower).

Issuers must also allow shareholders an opportunity to ask questions in the following ways:

1. Issuers must invite their shareholders to submit any questions they may have in advance. Issuers should then publicly address substantial queries received from shareholders at the AGM via the issuer’s website, through “live” webcast and on SGXNet.
2. Issuers may implement other arrangements, which may include organising virtual information sessions before the AGM and the close of proxy voting, to provide shareholders with a forum to ask questions and engage with management and the board of directors.

In relation to proxy voting, shareholders must appoint the chairperson of the AGM to act as proxy and direct the vote at the AGM. The chairperson must ensure that all proxy votes are voted as specified in all valid proxy forms and pursuant to the SGX Listing Rules, an independent scrutineer will be appointed to, inter alia, direct and supervise the count of votes cast through proxy.

Finally, the Updated Guidance requires the issuer to publish minutes of the AGM on its website, including its responses from management and the board of directors to substantial queries and relevant comments from shareholders, as recommended in the Code of Corporate Governance 2018.

Validity of existing mandates

In the FAQs, the SGX RegCo addressed the issue of whether mandates passed at an issuer’s previous AGM will remain valid until the date of the postponed AGM.

1. General share issuance mandates

The Companies Act (Chapter 50 of Singapore Statutes) (Companies Act) provides that a general share issuance mandate will continue in force until (a) the conclusion of the next AGM after the date on which shareholders’ approval was given, or (b) the date by which the next AGM is required by law to be held. Further, the SGX Listing Rules provide that a general share issuance mandate may remain in force until the conclusion of the first AGM following the passing of the resolution approving the mandate (unless revoked or varied in an earlier general meeting).

Based on the above, the SGX RegCo clarified that general share issuance mandates passed at an issuer’s pervious AGM will continue to be valid until the date of the postponed AGM.

2. Share buy-back mandates

Under the Companies Act, a resolution to authorise a share buy-back mandate must specify, inter alia, a date on which the mandate is to expire, which cannot be later than the date on which the next AGM is or is required by law to be held (whichever is earlier).

Based on the above, unless another date is specified in the relevant resolutions, the SGX RegCo stated that such mandates will continue to be valid until the date of the postponed AGM.

3. Interested person transaction (IPT) general mandates

The SGX Listing Rules provide that IPT general mandates are subject to annual renewal. However, the SGX RegCo also noted that the language in IPT general mandates typically provide that it will remain in force until the next AGM.

Delay of dividend payments

As a result of the current situation, issuers may wish to postpone dividend payments to a later date. An Issuer may do so by replacing its existing dividend announcement to provide the new record and/or payment date and relevant details. This can be done up to two (2) market days prior to the Ex-Dividend date, failing which the issuer must proceed with the original dividend payment.

Financial assistance for conduct of AGMs

The Singapore Exchange (SGX) has announced that it will provide a grant (AGM Facilitation Grant) of up to S$5,000 per qualifying issuer to help with the additional costs of organising AGMs in light of the various safe distancing measures put in place to combat COVID-19.The AGM Facilitation Grant will cover all AGM-related expenses that are incurred between 16 March 2020 and 15 March 2021. 

Announcement on upcoming legislative provisions to provide legal certainty on holding of meetings

As provided in the Announcement, the Singapore Government will introduce new legislation at the next sitting of Parliament (on or about 7 April 2020) (Proposed Provisions) to provide legal certainty on the holding of meetings. Subject to Parliament’s approval, the Proposed Provisions will:

1. allow alternative arrangements to be prescribed where:
   1. personal attendance at a meeting or class of meetings is provided for in any written law or legal instrument; and
   2. it is inexpedient or impracticable for the meeting or class of meetings to be convened, held or conducted in the manner provided for in the written law or legal instrument, in view of the prevailing Regulations; and
2. provide that meetings held or deferred, on or after 27 March 2020, in accordance with such prescribed alternative arrangements will be deemed to satisfy the relevant requirements under written law or legal instrument, despite anything to the contrary in any law or legal instrument.

The Announcement further provides examples of meetings where personal attendance is provided for in written law or legal instrument, which includes, amongst others, annual general meetings held under the Companies Act and the constitution of a company.

Finally, the Announcement emphasises that the Proposed Provisions are intended to help entities who face challenges in complying with the prevailing safe distancing measures, and are not intended to be mandatory. As such, entities who are able to comply with the prevailing safe distancing measures in accordance with the provisions in written law and their existing legal instrument should do so.

Should issuers still hold physical AGMs now?

In addition to the Updated Guidance, the Announcement and the FAQs, several of our clients have asked us if they can continue to hold an AGM by physical means (i.e. where shareholders attend in person at a venue). We would not recommend holding a physical AGM for the following reasons:

1. As mentioned above, on 27 March 2020, the MOH introduced regulations to limit attendance at non-prohibited events to 10 persons per venue. Typically, more than 10 shareholders attend the AGM of issuers. It would be difficult and risk complaints from shareholders if this year, issuers tried to limit attendance at the AGM to 10 shareholders.
2. On 3 April 2020, the Singapore Government announced that, from 7 April 2020 to 4 May 2020 (both dates inclusive), all workplaces in Singapore would be closed. The exception is for “essential services” such as healthcare, transport and banking.

Concluding remarks

The Updated Guidance, the Announcement and the FAQs provide further clarification on the courses of action that an issuer may take in relation to the conduct of its AGM. However, given the constantly evolving nature of the COVID-19 situation, companies should also be aware that the Regulations may change, and additional measures and advisories on the conduct of AGMs may be put in place accordingly.

The information in this article is updated as of 6 April 2020.

Dentons Rodyk thanks and acknowledges Legal Executive Sean Gallagher and Practice Trainee Ian Low for their contributions to this article.