Code recommendation for 14 working days’ notice of general meetings: ICSA guidance
The Institute of Chartered Secretaries and Administrators has published guidance on the UK Corporate Governance Code recommendations on the amount of notice to be given before a company meeting.
It concludes that companies may call meetings on short notice, as long as there is reasonable justification for doing so.
Since September 2014, the Code encourages companies to send notices of general meetings (which are not AGMs) to shareholders at least 14 working days in advance (Provision E.2.4). In practice this could have a significant effect on deal timetables for companies where a 14-day approval resolution has been passed at the preceding AGM, as they would need to allow for nearly three weeks notice of a general meeting, despite being only legally obliged to give 14 clear days’ notice. The Code recommendation for information about AGMs to be sent to shareholders at least 20 working days before the meeting remains unchanged.
The ICSA note aims to deal with queries raised about the wording of the revised provision by confirming the statutory and best practice requirements for notice of shareholder meetings applying to traded companies. ICSA also gives its views on the new provision, including, that:
- companies will not use the option to provide only 14 days’ notice of a meeting unless there is a need for urgency;
- it is helpful for shareholders to receive as much notice as possible;
- investors who have given a 14-day notice authority will expect companies to give their reasons for needing to call a general meeting at short notice in reliance on this authority; and
- explanations for departing from the Code recommendations should be given in the next annual report in the usual way.
ICSA also notes that its interpretation of the Code has been discussed with and agreed by the FRC (Financial Reporting Council). In addition, the FRC has indicated that it will be keeping the new wording of this provision under review.