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USE suspends AGM’s over coronavirus pandemic

Shareholders will now not be able to vote on resolutions such as dividend payments, changes to directorships, approval of accounts within stipulated timeframe

Kampala, Uganda | ISAAC KHISA | Uganda’s listed firms had big plans for their annual shareholders meeting (AGM) starting next month, giving opportunities to their owners and directors to determine their growth path.

But that will not happen as planned owed to Uganda Securities Exchange decision to suspend all the AGM’s in the wake of government’s move to limit large gatherings in the ongoing efforts to contain the spread of coronavirus that has ravaged more than 180 countries around the globe.

Uganda has  55 confirmed cases of coronavirus, commonly known as COVID-19, with 28 recovered,  and the government has imposed various restrictive measures aimed at reducing its spreads including banning public gathering, public  passenger transport as well as closing down all educational institutions.

USE Chief Executive Officer, Paul Bwiso, said firms that had planned to hold their AGM’s next month but are yet to notify their shareholders of their selected AGM dates should defer the meetings until restrictions are lifted.

“(Similarly,) issuers who at the time of this notice had already notified their shareholders of their AGM dates within the month of May 2020 are hereby required to postpone the same for such period until after the restrictions have been lifted; and to ensure that all affected stakeholders are notified in good time,” he said.

Bwiso, however, noted that any firm that intends to convene the AGM via video or teleconferencing or any other electronic means should ensure that it is permitted to do so under its Articles of Association and that I shall obtain a ‘no objection from the Exchange.”

“The Exchange will, following the lifting of restrictions on public gatherings and movement within the country advice Issuers on new timeline within which AGMs are to be scheduled,” he added.

This means that shareholders will not be able to vote on resolutions such as dividend payments, changes to directorships, approval of accounts and share splits and bonus issues.

However, other markets in the developed world such as the New York Stock Exchange and the London Stock Exchanges are considering temporarily allowing companies to hold their AGMs electronically this year due to the pandemic.

Section 138 of the Companies Act, 2012, provides that a public company shall in each year hold a AGM in addition to any other meetings in that year and shall specify the meeting as general meeting in the notices calling it and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next.

Traditionally, Ugandan listed firms always host their AGM’s in May and June, with the current law stipulating that executives of a firm that fails to hold one are fined up to Shs500, 000.

However, the law is unclear on what happens to firms that fails to hold their AGM’s within the stipulated timeframe in the event of a pandemic.

So far, some of the companies that had released their financial results and had announced or plans to announce date for their AGMs include; Stanbic Bank that recorded 20% growth in net profits to Shs259bn, dfcu that had recorded a 21% growth profit to Shs73.4bn and Umeme’s that recorded a 5% growth in net profit to Shs 139bn for the year ended Dec.2019.

Others are BATU that registered an increase in net profit from Shs 13.7bn to Shs 15.68bn and Bank of Baroda that recorded a 38% drop in net profit to 45.3bn.

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