Under the Companies Act 1931, every Isle of Man company is required to hold a general meeting once in every calendar year, and not more than 15 months after the last proceeding general meeting. Failure to comply with this may result in each company director being fined £5,000.
Now in truth, there is actually very little way in that the Companies Registry or the FSA might know whether companies are complying with this requirement, as you do not need to submit any documentation relating to company AGMs. If however you have a company with a large number of shareholders, they may rightly insist on such a general meeting and would be able to notify of any potential breach, leaving the directors in quite a spot of bother.
In the current climate of pandemic however, the Emergency Powers Act prohibits holding large gatherings, as well as any non-essential travel, with restrictions changing on a daily basis. Calling a general meeting of a company which has a large number of shareholders is therefore simply unrealistic and unviable.
To further add to the difficulties, not every set of Articles of Association allow for meetings to be held remotely/electronically, and there are still a large number of people who simply do not have access to technology. I will also point out that this is the Companies Act 1931; I doubt that constant suggestions of Zoom meetings would have made much sense to the people who drafted the legislation back then. Other options such as postal votes may similarly be unpractical and shareholders would be denied a platform to raise questions and concerns.
Despite this, there has not been a single provision made by the Isle of Man Government to address the matter. I have had several suggestions from friends and colleagues on how to deal with this, some more viable than others, but it is ultimately the Government’s lack of clarity that gets my hump and demonstrates the disjointed and panic driven approach to the current pandemic. I do not want potential solutions from colleagues. I want clarity from the people enforcing the law.
Now, the Companies Registry and the FSA have been hugely helpful and responsive in this matter, and I feel sorry for the people who have to deal with these enquiries without any clear Government guidance.
When I first contacted the Registry, they suggested seeking legal advice in regards to alternative means of holding an AGM, legal advice that would be paid for by the company at the detriment of its shareholders; quite simply unacceptable when there should be clear guidance from the Government. They alternatively suggested passing a written member’s resolution to dispense with the requirement of holding an AGM. Having attempted the latter and having over forty shareholders, this did, unsurprisingly, fail to gain unanimous agreement.
On reverting back to both the Registry and the FSA I was then informed by the former, that they did not expect us to hold an AGM under current circumstances. A day later, the FSA came back saying they could defer our requirement to hold an AGM under the Companies Act 1982. Having applied for this, our deferral was granted covering us to the end of the year, with the process at this stage being handled very swiftly and competently.
As I previously noted, both the staff at the Companies Registry and the FSA were incredibly helpful throughout, however the total lack of ability to provide a clear approach under Emergency Powers Act, and instead having to refer back and forth to existing legislation, demonstrates just how haphazard our Government has been on dealing with this whole situation. Surely some consideration should have been made granting a blanked dispensation to all companies.
It is quite frankly shocking that people are left in a position where restrictions implemented by the Government might leave them being personally fined £5,000 by a Government body. These, I suppose, are the issues you face when you have a country run by hobby politicians who only react rather than plan.
Charlton Krentz 