Listed companies seeking to hold virtual annual general meeting must first convince the Capital Markets Authority (CMA) that the shareholders are well informed, can transparently ask questions and vote.
The CMA has said the approval process would take two weeks before the regulator can issue a no-objection letter. Then the companies must issue a 21-day statutory notice of the intended general meeting to shareholders.
“In order to protect the rights of all shareholders, the CMA has emphasised that all shareholders should be given ample time to raise their questions and receive explanations from the directors and/or management,” said CMA acting chief executive Wycliffe Shamiah.
Social distancing regulations and limitation of the movement have made it impractical to hold AGMs, which are needed to endorse crucial company decisions, especially on dividend pay, change of directorship and audit firms.
The dividend payments are key to putting money in the pockets of small shareholders who require cash to meet personal expenses that ultimately boost demand in an economy hit by coronavirus.
The CMA had frozen shareholder meetings in line with the State directive that prohibits mass gatherings like meetings, weddings and funerals to contain the spread of the Coronavirus.
It initially allowed companies whose rules allowed for virtual meetings while the rest were exempted from the meetings but allowed to pay dividends and conduct the AGMs at later dates.
However, ScanGroup #ticker:SCAN, which was unable to proceed with the sale of part of its business for Sh5 billion went to court, which allowed all listed firms to hold virtual meetings even where internal rules do not allow.