Coronavirus (COVID-19) legal implications of social distancing on events and board meetings

As the UK deals with the Coronavirus outbreak, businesses and charities will be looking at ways to comply with the Government’s social distancing advice whilst also ensuring that business carries on as usual wherever possible. Many organisations, particularly those based in cities, have already instructed staff to work from home where possible.

Following the COBRA meeting of UK Government Ministers and advisors on 12 March, the advice to anyone suffering from a new fever or flu-like-symptoms is to self-isolate and it is likely that in the coming days, additional social distancing measures will be put in place.

Instinctively, many businesses are reacting to this advice by cancelling events such as business meetings, conferences and AGMs.

Suspending Events

Many businesses will be closely analysing the Force Majeure clauses in their business contracts. Essentially, these clauses are there to fairly apportion the risk between contracting parties of unforeseen circumstances preventing either party from performing its obligations under the contract. Usually, a Force Majeure clause will specifically include Epidemic and Pandemic in its definition of a Force Majeure Event, and the parties will be required to effectively, suspend the contract until the circumstances change and the contract is capable of being competed.

Even in the absence of a Force Majeure clause, parties to a contract will be able to agree to amend, suspend or even terminate the contract in response to changing circumstance. The key here, is to ensure that any changes are carefully considered and set out in writing (most contracts will only allow a variation if it is in writing). When considering an amendment, suspension or termination, we would urge you to carefully consider the commercial and practical consequences and ensure that any consequential liabilities are fairly apportioned.

Conducting Board Meetings

Cancelling pre-planned company meetings, may not be necessary if your company has the facilities to hold meetings electronically, and a sufficient number of attendees are fit and able to participate.

The way in which board meetings (meetings of the company directors or charity trustees) can be held is different to the way in which General Meetings (meetings of the Members or Shareholders) must be held. Therefore, when considering whether a meeting can be held electronically, you must make the distinction between the two types of meeting.

Generally, the directors of UK companies are able to manage their meetings as they see fit. However, the Companies Act 2006 puts in place strict rules relating to the conduct of General Meetings in order to protect the rights of Members to hold directors to account.

Unless the Articles of Association prohibit the Board from meeting electronically, or specify that the directors must meet in person, a Board Meeting can usually be held using video conferences or telephone conferencing, providing that the relevant notice provisions have been complied with and the quorum is met.

The position is slightly different with General Meetings and there have been various court cases considering whether meetings were validly held when, for example there isn’t sufficient space for all of the members to the occupy the same room.

For General Meetings a Company would usually require a specific provision in the Articles allowing a meeting to be conducted electronically. In addition, the notice calling the meeting ought to specify the telephone number which should not be a premium rate number. The relevant notice provisions must also be complied with and the quorum met.

For very large General Meetings, the correct decision may still be to postpone until the advice from the UK Government has changed.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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