CMA orders listed firms to postpone AGMs over Covid-19

The Capital Markets Authority (CMA) has asked listed firms to postpone annual shareholder meetings (AGMs) in the wake of calls to shun large gatherings for fear of coronavirus infections.

Acting chief executive, Wyckliffe Shamiah said firms set to hold AGMs between now and May should defer.

The suspension is in line with the State directive that prohibits mass gatherings like meetings, weddings and funerals to contain the spread of the virus.

“Listed companies and licensed persons including collective investment schemes are advised to defer the meetings to a later date while ensuring all affected stakeholders are notified in good time,” said Mr Shamiah

The action means shareholders will not be able to vote on resolutions like dividend payments, changes to directorships, approval of accounts and share splits and bonus issues.

While several companies amended their articles of association to allow for virtual meetings, analysts say low investment in technology may hamper adoption electronic voting.

In the West, online voting at AGMs has jumped since the coronavirus outbreak as investors shun large gatherings because of travel restrictions or fear of infection.

Section 310 of the Companies Act, 2015 provides that a public company is statutorily compelled to hold an AGM within six months from its financial year-end.

This means that companies whose financial year end in December, have till end of June to hold the shareholder meetings.

But traditionally these firms host the meetings in April and May.

The law puts a fine of up to Sh1 million for failing to hold AGM on time.

However, Muthomi Thiankolu, a partner at Muthomi & Karanja Advocates says the law cannot be blind to the threat posed by coronavirus.

“The makers of law never envisioned such a situation.

The prevailing context does not permit compliance and so I don’t think any penalty can flow for non-compliance in this case,” he said.

Kenya has so far recorded seven cases of coronavirus, prompting the State to issue fresh measures to limit contacts, including suspending travel from any country with reported Covid-19 cases and closure of schools and universities.

Several companies are allowing staff to work from home.