Companies Act amendment will eliminate high legal costs — Senator WehbyWednesday, October 27, 2021
Senator Don Wehby, who is also group chief executive officer (CEO) of GraceKennedy (GK) Limited said companies have been footing a bill in the region of $1 million each in the pursuit of seeking court approval for holding hybrid annual general meetings (AGMs) under COVID-19 conditions.
The Companies (Amendment) Act, 2021 allows companies to host general meetings in a virtual or hybrid format and allows the Registrar of Companies to grant an extension of time for the holding of an AGM to avoid any penalties that could arise if they are unable to hold the AGM within the time frame stipulated in the legislation.
In his contribution to the debate on the amendments, Wehby outlined that many companies have faced challenges in hosting their annual general meetings owing to the measures implemented under the Disaster Risk Management Act, which imposes restrictions on gatherings to curb the spread of the COVID-19 virus.
Currently, companies have been approaching the courts on a case-by-case basis to get permission to convene at significant cost.
“The cost of seeking permission from the court to convene a virtual/hybrid meeting is approximately J$1 million, an added cost burden in an already challenging economic environment,” Wehby stated. “We have also seen where additional costs have been incurred by companies to make provisions to host an in-person general meeting that complies with health and safety protocols.”
The Government senator said that these costs can be minimised with the proposed amendments to the Companies Act. “We are living in unprecedented and unpredictable times and we are not sure when the pandemic will end. The health and safety of all stakeholders are paramount. This legislation is therefore timely as it offers a feasible option for companies to host general meetings in a format that will ensure the safety of stakeholders while supporting business continuity,” Wehby said.
He disclosed that GK was able to use software developed in Jamaica for virtual meetings, adding, “We also benchmarked against international companies such as Coca-Cola and Nestle in the United States that had virtual meetings, and Barclays Bank in the UK which had a closed meeting with live stream.”
“I always say in every crisis there is opportunity. For the first time in GraceKennedy's history, shareholders were able to participate online in discussion and vote virtually in our AGM.”
“I believe that the hybrid meetings will become the norm in the future. A hybrid meeting allows persons to participate at the same time using an electronic means and by being present in person,” he outlined. In this format everyone comes together irrespective of time zone, physical distance, or other circumstances.
“GraceKennedy, for example, is an international company with shareholders in 24 countries across the world — including Italy, Australia, China, and Japan, and all participated. In my opinion, this is a big positive for the equity market in Jamaica and the Jamaica Stock Exchange,” Wehby concluded.