A few weeks ago, the Corporate Affairs Commission (the “CAC”) issued guidelines to public companies on how to hold their Annual General Meetings (“AGM”) in light of the outbreak of the COVID-19 pandemic. To be specific, these guidelines were issued to encourage social distancing at AGMs and ensure those meetings do not have more than 20 people in attendance. In addition, the CAC also asked that public companies seek its approval before any AGM is held during the lockdown.
Shortly after these guidelines were issued, one of Nigeria’s first tier banks, announced it had obtained the CAC’s approval to hold its AGM with majority of its shareholders willing to attend using proxies. The Bank’s AGM was subsequently held in Lagos in compliance with the guidelines issued by the CAC. Close to 500 shareholders representing over 50% of the Bank’s issued share capital were present. Of this number, less than 10 shareholders were physically present, whilst the remaining members were represented by proxies. Key resolutions were passed, including the resolution to pay a dividend for 2019.
The question which comes to mind, is whether and to what extent, the CAC could validly compel public companies who wish to hold AGMs to insist their shareholders must appoint proxies? This to us would appear to be a denial or limitation of a shareholder’s rights to attend the general meeting in person. Whilst there is still a bill for the amendment of the CAMA, it does not have any provision in its present form authorizing the CAC to make these guidelines. We ask another question, what if a shareholder, Mr Buraimoh (not a real name) wanted to participate personally in the deliberations at the Bank’s AGM? Would the CAC guidelines have fettered Mr Buraimoh’s right as a shareholder? If this is the case, can Mr Buraimoh validly challenge the decisions taken at the Bank’s last AGM? Assuming the Bank had been advised by its lawyers to disregard the CAC’s guidelines, what options could the bank use to ensure it holds its AGM according to the letters of the law?
As interesting as these times are, the President, in light of the Quarantine Act, made the COVID-19 2020 Regulations on 30th March 2020, and imposed a total lockdown in Lagos State, Ogun State and the Federal Capital Territory, Abuja (“FG lockdown”). This was further extended by two weeks through Regulations No.2. On 27th April 2020.
However, the President in his national broadcast approved a phased and gradual easing of the FG lockdown measures in the affected states. Based on the President’s speech, selected businesses and offices could open from 9am to 6pm effective, Monday, 4th May 2020. Overnight curfew was also imposed from 8pm to 6am but this would not apply to essential services.
This FG lockdown has further impeded companies from holding any form of physical meetings. Consequently, many businesses whether registered as a public limited liability company, private limited liability company or otherwise, are currently beset with the singular challenge of putting physical meetings on hold during the FG lockdown or arranging virtual meetings (where their Articles of Association allow the same) to ensure business continuity, hold pre-scheduled board or annual general meetings, to take decisions that will shape the future of their respective undertakings.
Faced with these current realities, for the first time in Nigeria, the High Court of Borno State held a virtual court session through video-conferencing facilities on 27th April 2020 and delivered judgment in a criminal matter. Similarly, the Chief Judge of Lagos State has issued Practice Directions for the remote hearing of cases, as a measure to curtail the widespread of the Covid-19 pandemic.
Acknowledging that we are all about to go into a new normal, we have reviewed the relevant provisions of the CAMA to give our comment on how companies may legally and effectively meet during the FG lockdown to support business continuity and preserve the interests of their stakeholders during and after this pandemic.