Editorial | Bring AGMs into new normal, too
As his Government strains to get the economy as close as possible back to full operation, Prime Minister Andrew Holness has been telling Jamaicans that they must be prepared for a “new normal”.
“We have to learn to live with COVID-19,” Mr Holness has said. We agree.
For, as everyone knows, there is yet no vaccine or specific antiviral drug for the novel coronavirus that causes the respiratory illnesses that have killed hundreds of thousands of people around the world.
The best that governments have been able to do, up to now, to slow the spread of the disease is to order their citizens to, where possible, stay at home, limit the operation of businesses, and to close their borders to incoming passengers. This has largely been the case in Jamaica for the better part of three months.
The upshot: a global economy which will decline by more than three per cent this year, having endured the greatest and most encompassing shock since the Great Depression. Millions of people have been thrown out of work. In Jamaica, where the tourism industry has collapsed, output will slump by more than five per cent in 2020. And that’s the optimistic outlook.
It’s little wonder, therefore, that the PM, like many other people, is eager for workers – at least, those who are still employed – to get back to their jobs fully, starting June 1. He wants firms revving up to speed.
But the new normal wrought by COVID-19, in relation to conduct of business, isn’t just about wearing face masks in public, appropriate physical distance at the workplace and in business establishments, or practising good hygiene.
For instance, how firms, especially public ones, meet their obligation of accountability and transparency to shareholders in the new environment is a matter that has been exercising corporate minds, although it isn’t a subject of popular discourse.
Section 126 of Jamaica’s Companies Act obligates firms to hold shareholders meetings annually, no later than 15 months after the previous one. These are interpreted to be gatherings of warm bodies at physical venues, which, in the circumstances, is problematic. The Government currently prohibits assemblies of more than 20 people.
Firms might consider leveraging digital technologies and hold virtual annual general meetings, and other forums, or combining digital get-togethers with physical-presence, brick-and-mortar events. That is increasingly the case in other jurisdictions, where people are having to adopt – and adapt to – new ways of doing business.
But the Jamaica Stock Exchange (JSE) has been advised by the Companies Office of Jamaica, as well as its private attorneys, that firms just can’t just proceed with digital shareholders meetings, lest their decisions are invalidated at a later point.
However, Section 130(2) of the Companies Act allows firms, in circumstances where “ ... it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called, to apply to the court for the meeting ... to be called, held and conducted in such manner as the court thinks fit”.
THE PROBLEM OF PAYMENT FOR REPRESENTATION
The JSE is instituting ‘representative action’ in the Supreme Court along this line. Except that it isn’t proposed to act on behalf of all its listed members – only those that pay part of the legal bill. Therein is this newspaper’s problem.
The JSE is a company, which itself is listed on the stock exchange. It is in the business of facilitating the trading of stocks and shares and related equities. Firms pay, not cheaply, for the privilege of their listing and for any related services they receive from the JSE.
This is a profitable enterprise for the owners of the stock exchange. Indeed, the bill for the proposed ‘representative action’ should be part of their cost of doing business and of ensuring that their clients want to remain as part of that market, rather than being lured by a competitor, should one arise.
Alternatively, the JSE should be aggressively lobbying the Government to amend the requisite sections of the Companies Act, which can be done in short order, to allow for holding of hybrid ‘live’ and virtual meetings in certain circumstances, including when the Government declares a state of public disaster or invokes some similar authority. Indeed, Jamaica’s laws allow, in some situations, for the virtual hearing of evidence in court cases; and our courts, as happened last week, have delivered judgments virtually. Some parliamentary committees have also been meeting virtually.
That’s the new normal. Why not shareholders’ meetings, too?