Extension of Companies (Miscellaneous Provisions) (Covid-19) Act 2020 to support businesses

1 February 2021

The Interim period as introduced under the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 (the “Covid Act”) in August 2020 has been further extended to assist businesses in dealing with continuing challenges in recent times.

A statutory Instrument, (S.I. No. 672/2020, Companies Act 2014 (Section 12A(1)) (Covid-19) Order 2020 (the “Order”)) which was signed on 15 December 2020, extends the interim period introduced under the Covid Act from 31 December 2020 to 9 June 2021.

As a result, the helpful provisions which were introduced in August 2020 continue in place until the 9 June 2021. The following are the main provisions

Execution of Documents under seal

Up until 9 June 2021, a document may be executed by affixing the company seal to one document and executing the necessary signatures in separate counterpart documents. The separate documents are then viewed as one instrument for the purposes of the Companies Act 2014. This changes the typical rule that two directors or the company secretary and one director must countersign the company seal on the same page. The requirement to have directors available to countersign the seal in the traditional manner had been proving difficult for many companies in the current environment. Certain businesses may find other options as mentioned in our previous updates easier e.g. use of Powers of Attorney.

General Meetings

The following range of changes previously introduced in respect of conducting general meetings and extraordinary general meetings now continue to 9 June 2021.

  • General meetings may be conducted wholly or partly as electronic/virtual meetings. All attendees must have a reasonable opportunity to participate in the meeting. This may include the use of electronic communications technology for conducting the meeting and for casting votes. This means a member does not need to be physically present at the meeting.
  • The use of electronic communications technology may be subject to such requirements or restrictions put in place by the company to ensure the identification of attendees and the security of the technology to achieve the objectives required.
  • Where in the opinion of the Directors it is deemed necessary to comply with Public Health Guidance, the Directors can change the date, location and means of holding the meeting at any time up to the end of the day prior to the day on which the meeting is to be held. Companies may cancel meetings without the need to have a formal adjournment of the meeting in the first place.
  • Virtual attendance at a meeting continues to count as a quorum at the meeting.
  • The Covid Act allowed a company to postpone its AGM up to 31 December 2020. This has not been extended to 9 June 2021. In line with statutory requirements, companies must therefore hold an AGM within 15 months of their last one and within nine months of the company’s financial year end.

Dividends

Directors can still withdraw a resolution to approve a dividend or propose an amendment to the resolution to provide for a reduced dividend where the directors were of the opinion that, due to the ‘actual or perceived consequences of COVID-19 on the affairs of the company, the dividend should be cancelled or reduced’. This option remains open to directors. This power is limited in application, however, and may only be exercised subject to agreement in writing by all the members of the company.

The continuance of the above measures will ease the difficulties companies were facing in complying with statutory obligations during the COVID-19 pandemic and provide the continued clarity and flexibility required by many companies in the face of continuing restrictions.

For further information please contact Leonora Malone, Partner, or another member of the Corporate team at Eugene F Collins.

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