Responding to COVID-19: Conducting Shareholder Meetings with Safe-Distancing Measures

The Singapore Ministry of Health (MOH) imposed tighter safe-distancing measures on 24 March to minimize further spread of the coronavirus (COVID-19). Because of the fluid and unpredictable nature of COVID-19, companies and shareholders must maintain flexibility throughout this emergency and implement alternative means to ensure compliance with MOH directives. 

The Infectious Diseases (Measures to Prevent Spread of COVID-19) Regulations 2020, which took effect 27 March and codify MOH’s safe-distancing measures, limit gatherings outside of work and school to 10 persons or fewer and will remain in place until 30 April, with the possibility of a further extension if the situation does not improve. Under the regulations, any person who is guilty of an offense shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding six months, or to both. The measures pose challenges for companies whose constitutions do not allow shareholder meetings to be held via virtual means. The sudden imposition of the measures also gives little time for companies to hold an extraordinary general meeting to amend their constitution to allow for virtual shareholder meetings.

In this regard, the Singapore Ministry of Law (MinLaw) and the Ministry of Finance (MOF) have announced there will be upcoming legislative changes to assist entities that face challenges to hold meetings where personal attendance is provided for, in any written law or legal instrument in Singapore, in compliance with MOH’s regulations and safe-distancing measures. The Monetary Authority of Singapore (MAS), the Accounting and Corporate Regulatory Authority (ACRA), and Singapore Exchange Regulation (SGX RegCo) also issued a joint statement on 25 March stating that all companies are expected to comply with the mandatory safe-distancing measures, and provided an updated guidance on general meetings on 31 March to provide legal certainty on how companies are to carry out their shareholder meetings.

MinLaw and MOF to Propose Legislative Changes

MinLaw and MOF announced the government will introduce new legislation at the next sitting of Parliament (on or about 7 April) to provide legal certainty on the holding of meetings.

Subject to Parliament’s approval, the proposed provisions will:

• Allow alternative arrangements to be prescribed where:
  • Personal attendance at a meeting or class of meetings is provided for in any written law or legal instrument.
  • It is inexpedient or impracticable for the meeting or class of meetings to be convened, held, or conducted in the manner provided for in the written law or legal instrument, in view of the prevailing regulations.
• Provide that meetings held or deferred, on or after 27 March, in accordance with such prescribed alternative arrangements will be deemed to satisfy the relevant requirements under written law or legal instrument, despite anything to the contrary in any law or legal instrument.

MinLaw and MOF also provided a non-exhaustive list of examples of meetings where personal attendance is provided for in written law or legal instrument in Singapore:

• Meetings (e.g., annual general meetings (AGMs) and extraordinary general meetings) held under the Companies Act and each company’s constitution.
• Meetings held under trust deeds, and in particular, listed business trusts and listed real estate investment trusts.
• Meetings held under the Variable Capital Companies Act and the variable capital company’s constitutions.
• Meetings held by management corporation strata title (MCST) under the Building Maintenance and Strata Management Act.
• Creditors’ meetings.
• Meetings in relation to the winding up or liquidation of entities.
• Meetings held under the Societies Act and the society’s rules.
• Meetings held under the Co-operative Societies Act and the co-operative society’s bylaws.
• Meetings held under the Town Councils Act and the town council’s standing orders.
• Meetings held under the Trade Unions Act and the trade union’s rules.

If passed, the proposed provisions are intended to be brought into force as soon as possible. Entities that are planning to conduct meetings in the meantime should minimally adopt the following:

• Allow and strongly encourage attendance at meetings using teleconferencing, video-conferencing, or other electronic means.
• Allow meeting attendees to appoint their proxies using electronic means, such as by email.
• Allow meeting attendees with rights to participate to exercise these rights to the extent possible and appropriate, such as by allowing questions to be submitted by email in advance, and responses to be conveyed by teleconferencing, video-conferencing, or other electronic means.
• If voting is required, strongly encourage meeting attendees to vote by proxy, or (if available) by electronic modes of voting.
• Provide meeting attendees with access to meeting materials.

It should be noted that the legislative changes will likely only affect the constitutions of companies incorporated in Singapore and written law and legal instruments of Singapore. Offshore companies that are listed on the Singapore Exchange may still be required to abide by their constitutions, which are governed by the laws of the country in which they are incorporated.

MAS, ACRA, and SGX RegCo Guidance on Conduct of Meetings

In view of these developments, companies must implement alternative means for the conduct of their meetings to ensure compliance with the regulations, which will remain in place until 30 April. 

SGX RegCo on 27 February announced measures to give time extensions for listed companies with a 31 December year-end to defer their AGM to after 30 April (by 30 June). Listed companies that need more time to put in place alternative arrangements for organizing virtual meetings will now be able to obtain an extension to do so.

Companies that chose to proceed with their meetings before 30 April must conduct the meetings in a manner that provides opportunity for shareholders to ask questions, provides for the meeting to be shown by live webcast, and allows for proxy voting. At these meetings, any quorum requirements will be satisfied through the attendance of the minimum number of shareholders specified in the company’s constitution, or up to the number of individuals permitted under the regulations—whichever is lower.

Companies must allow shareholders an opportunity to ask questions in the following ways:

• Companies must invite their shareholders to submit any questions they may have in advance. For listed companies, they should then publicly address substantial queries received from shareholders at the general meeting via the listed companies’ website, through live webcast, and on SGXNet.
• Other arrangements may include organizing virtual information sessions before the general meetings and the close of proxy voting to provide shareholders with a forum to ask questions and engagement with management and the board of directors.

For proxy voting, shareholders must appoint the chairperson of the general meeting to act as proxy and direct the vote at the general meeting. Listed companies are strongly encouraged to provide at least 21 days’ notice to shareholders on the general meetings to allow shareholders to consider the matter, to pose questions if necessary, and vote by proxy. Shareholders should submit the proxy form by mail or electronically.

Meanwhile, shareholders are strongly encouraged to use alternative ways available to participate in meetings, including virtual means. To exercise their voting rights, shareholders may wish to consider appointing the chairperson of the general meeting to act as proxy and direct the vote at the shareholder meetings.

Central Provident Fund (CPF) or Supplementary Retirement Scheme (SRS) investors who wish to appoint the chairperson as their proxy should approach their respective CPF agent banks or SRS operators to submit their votes at least seven working days before the general meetings.

Listed companies must publish minutes of the general meetings on their websites, including responses from management and the board of directors to substantial queries and relevant comments from shareholders as recommended in the Code of Corporate Governance 2018.

Listed companies may also wish to reassess any other measures previously contemplated in light of the safe-distancing measures, including cancelling or reducing its food orders for the AGM, and inform shareholders accordingly in the announcement.

SIAS Advisory for Conducting Shareholder Meetings

SGX RegCo has also worked together with the Securities Investors Association Singapore (SIAS) to provide guidelines to help shareholders navigate the AGM, considering that companies are unlikely to be able to hold physical meetings.

SIAS advised shareholders to avoid attending the meetings in person, but instead to follow the meetings via webcasts and to avoid congregating to watch the webcasts. SIAS also advised listed companies to provide instructions on how to participate in the AGM in an announcement (to be published on SGXNet) and give shareholders ample time to consider the matters at hand and vote via proxy. The announcement should include arrangements for shareholders to ask questions, as well as video and webcast facilitation of the meeting, to ensure that shareholders can attend remotely.

MOM Advisory on Safe-Distancing Measures in the Workplace

The Singapore Ministry of Manpower (MOM) also issued an advisory on 26 March to require employers to adopt strict safe-distancing measures in the workplace.

The measures include:

• Allowing employees to telecommute from home.
• For job roles or functions where the employees cannot work from home, such as frontline operations and fieldwork at construction sites, shipyards, or plants, employers must take the following precaution:
  • Reduce the need for and duration of physical interactions.
  • Stagger working hours.
  • Defer or cancel all events.
  • Implement or enhance shift or split-team arrangements.

Prior to implementing the above measures, employers should clearly communicate and explain them to employees. Unionized companies should engage their unions on such arrangements.

Employers should be mindful that MOM and MOH will take enforcement actions against employers who do not implement safe-distancing measures, including ordering employers or occupiers to cease operations until the measures are put in place.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.