Page 4 - The Law of Difficult Meetings

The Law of Difficult Meetings

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1. GENERAL INTRODUCTORY REMARKS

Outside the criminal law there can be few better examples of complex rules struggling to govern those who do
not wish particularly to be ruled than those applying to difficult or hostile company meetings. However, unlike the
situation with respect to criminal law, where rule‑breakers seek to avoid the application of rules to themselves, the
hostile faction at a company meeting may not be wholly or at all rule‑breaking, but indeed rule‑exploiting in order
to frustrate, subvert or change the meeting’s agenda.

It is a key principle of the UK Corporate Governance Code (the “Corporate Governance Code”) that “[t]he Board
should use the AGM to communicate with investors and to encourage their participation”. The Institute of Chartered
Secretaries and Administrators (“ICSA”) interprets this to mean that the Chairman of a general meeting must be
prepared to allow debate and questions – the general meeting is an opportunity for shareholders to speak, not
simply a forum for the Board to deliver speeches or prepared answers to previously submitted questions.

Therefore the task of the company (assuming that it is the AGM or any similar such meeting convened by the
Board) and more specifically the Chairman of the meeting and his or her advisers is broadly twofold:

• to maintain order and discipline while driving the meeting forward at a reasonable pace, and

• to anticipate and respond to lawful devices employed against the company’s business.

In a difficult or hostile meeting, the test for the Chairman is how well he can achieve these aims without impinging
on the legitimate interests of shareholders and the principle of the Corporate Governance Code referred to above.

2. THE PURPOSE OF THIS PAPER

The present discussion must necessarily be selective, because there is a vast corpus of law concerning company
meetings (unsurprisingly, battles fought at meetings are sometimes continued in the courts) and a critical element
in the legal analysis is the articles of the company concerned. It is possible with well‑drawn articles to remove
much (but not all) legal uncertainty from some areas and to tip the balance of power at meetings very much in
the direction of the Chairman of the meeting. However, different companies have different views and traditions
and it is not particularly useful to generalise (although it is always very important for the directors to know and
understand the provisions of their company’s articles).

This discussion will concentrate on law and practice at the meeting itself. It assumes that the resolutions and notice of
meeting have been correctly formulated and given, that any necessary explanatory circular is satisfactorily complete
and accurate and that there has been no trouble with record dates, proxy cards or disputes about membership.

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