How did we get here?
Covid-19 has caused great change and upheaval around the world, many people have had their routine way of doing business altered drastically. Companies are no exception and have not been able to escape the tides of change brought on by the pandemic. One of the many changes in the world of business in Jamaica has been the widescale implementation of virtual or hybrid general meetings by registered companies.
No doubt, many of us may have noticed that since March 2020 there have been numerous applications, made by companies, to the Supreme Court for permission to convene virtual or hybrid general meetings. A hybrid general meeting is a general meeting of the members of the company where persons may attend either in-person or remotely. A virtual general meeting is a general meeting of the members of a company where every attendee attends the meeting remotely.
On November 2, 2021, the Companies (Amendment) Act, 2021 took effect. This amendment to the Companies Act now made it clear, if any were in doubt, that companies were allowed to convene hybrid or virtual general meetings without first obtaining the permission of the Court, once their Articles of Incorporation do not prohibit the holding of hybrid or virtual meetings.
While this is still a very new modus operandi for Jamaican companies, many other nations, such as Canada, have allowed their companies to conduct hybrid and virtual general meetings for many years prior to the onset of the covid-19 pandemic.
Requirements for a virtual/ hybrid meeting
The main concern in shifting to remote or hybrid meetings is to ensure that all the attendees are able to “communicate adequately” with each other. This has been found in practice to mean that the company must ensure that all attendees at the meeting are able to participate in the conduct of business to the same degree that they would be able to participate had the meeting been held in-person.
This requirement is reflected in section 133A (2) of the amended Companies Act which states that
“A company shall not cause a general meeting to be held as hybrid meeting or a virtual-only meeting, unless satisfied that each attendee is able to attend and fully participate in the meeting, if held in such manner.”
To conform with the new provisions of the Companies Act, a general meeting must allow:
An attendee to participate in the conduct of the business of the company at the meeting
- An attendee to see, be seen, hear, be heard, to be identified and to identify other attendees
- An attendee to communicate effectively with the chairman, other officers, and other attendees during the meeting
- For confirmation of the attendees and quorum required for the meeting
- A proper record of the business of the meeting to be kept
- For the casting of votes by the persons entitled to vote
In the event of technical difficulties by participants.
The amendments to the Companies Act also consider the difficulties a company may face when dealing with all of the connectivity issues that plague a nation transitioning to a virtual world. We have all had the experience of attending meetings online punctuated with questions such as “can you hear me?” and “are you seeing my screen” from presenters and participants alike.
Thus, section 133E of the amended Companies Act provides that if a significant number of attendees are experiencing connectivity issues during a meeting, to the extent that a quorum is lost, then the meeting should be adjourned immediately to a later date and time to be agreed on by the members remaining present. The Act also states that the quorum is not affected if the members that are disconnected are reconnected to the meeting within a reasonable time and gives the chairman of the meeting a discretion to determine what a reasonable time is in the circumstances.
Some critics of the virtual and hybrid meeting formats have raised the concern that there is an increased danger of minority shareholder engagement being reduced or manipulated by the new format. They have also mentioned that directors will not feel the same amount of pressure from dissatisfied shareholders in a virtual or hybrid setting and therefore director accountability may be detrimentally affected by these formats.
The advantages of the new meeting formats are many. Firstly, an attendee may now attend a general meeting of the company from anywhere with a stable internet connection. This will allow for greater overall attendance and shareholder participation at the meetings, especially meetings of larger companies. Secondly, this new legislation may allow a company to reduce the costs of staging a meeting as smaller venues can be used or no venue at all in the case of a virtual only meeting. Additionally, there is also a chance that this new regime will make local companies more attractive to foreign investors who will have an increased ability to attend general meetings of the company themselves.
The passing of the amendments to the Companies Act have solidified the place of virtual and hybrid general meetings in the toolbox of the Jamaican company. The long-term benefits of this addition are yet to be seen. However, it has already had a material impact on the way Jamaican companies do business making it even more possible for Jamaican companies to participate in and navigate this new age alongside the rest of the world.
Luke Phillips is an Associate at Myers, Fletcher and Gordon. He may be contacted at firstname.lastname@example.org or through the firm’s website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.