As a result, it has not been possible for companies, who so desire, to hold an AGM with its members being physically present.
On 15th May 2020, Mr Nicholas Alexander Nesbitt, instructed us to move the court in HC Comm. Misc. E721 of 2020 Nicholas Alexander Nesbitt And Registrar of Companies to allow AGMs to be conducted virtually. The Application, inter alia, sought leave to conduct virtual or hybrid meetings on the basis of the impracticability to hold physical general meetings due to the ongoing novel Coronavirus 2019 (COVID-19) pandemic and the related Public Health Regulations and Directives passed by the Government of Kenya precluding public gatherings.
A consent order was entered on 9th June 2020, before Hon Justice David Majanja, allowing all companies to hold virtual or hybrid AGMS. This order sets a precedent that will ease the doing of business in Kenya during this COVID-19 period.
Leave has now been granted to companies, to hold general meetings employing the use of technology or any other hybrid means necessary to facilitate the running of the general meeting and all related business thereto, subject to compliance with the provisions of the Companies Act, the regulations and the guidelines issued by the Registrar ‘Guidelines on the Conduct of Hybrid and Virtual General meetings by Companies’ published on the Business Registration Service website, www.brs.go.ke.
Section 275A (1) of the Companies Act, 2015 requires all Companies except single member companies to hold Annual General Meetings. Without such meetings, the shareholders and the companies would be prejudiced as it would handicap the business undertaken at a typical annual general meeting. It also exposes Companies and individual directors to various civil and criminal sanctions for non-compliance.
Any meeting convened, held and conducted in accordance with this order shall be taken for all purposes to be a general meeting of the company properly convened.
The order once extracted shall be published on the Business Registration Service website www.brs.go.ke.
Meetings are not only a question of decision taking by members but they are required by law as a form of compliance and reporting. Under Section 310 of the Companies Act 2015, public companies must hold an Annual General Meetings and file the annual returns to the Registrar of Companies. Further, for public listed companies, paragraph 1.8 of Capital Markets Act Guidelines on Corporate Governance Practices by Public Listed Companies in Kenya requires annual reports where they must disclose their activities and accounts for the financial year in question. Private companies, however, are bound by their Memorandum and Articles.
We are pleased to have represented Alexander Nesbitt on this matter and to have facilitated a solution to this problem for all companies.
For further advice and assistance in compliance while conducting virtual and hybrid AGMs kindly get in touch with our commercial and corporate governance experts Allen Waiyaki Gichuhi, Charles Wamae, Melanie Munyori, and Ambrose Waigwa.
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