Oman update - The new CMA rules on holding general meetings electronically
Following Capital Market Authority (CMA) Circular E/3/2020 which suspended general meetings until further notice because of the COVID19 pandemic, the CMA has issued Administrative Decision No E/25/2020 (Decision) and Circular E/8/2020 (Circular) lifting the suspension by allowing general meetings of public joint stock companies and investment funds to be held electronically. In this note we look at the procedures for holding general meetings set out in the Decision and the Circular.
To facilitate electronic general meetings, Muscat Clearing and Depository Company (MCDC) have developed an electronic platform through which shareholders and unit-holders will be able to attend general meetings without physical attendance. The MCDC will publish guidelines on the use of electronic platform in the coming days and a webinar will be held at which CMA and MCDC officials will give a briefing on the electronic platform in Arabic on 23 April.
The procedures for holding a general meeting set out in the Circular and the Decision cover convening a meeting, quorum and attendance, voting and post-meeting administration.
In a further circular published on 20 April 2020 the CMA has required all companies and funds to hold their general meetings in accordance with the new regulations by 30 June 2020.
Convening a Meeting
At least 11 days prior to the scheduled date of the meeting, the agenda, signed by the legal advisor, the chairman of the board and the external auditors, must be sent by the legal advisor to the CMA for approval.
If the legal advisor is unable to obtain the written approval of the agenda from the chairman of the board or the auditors, either may approve the agenda via email or an official letter, which shall be submitted to the CMA together with agenda.
Following approval by the CMA and at least 10 days prior to the scheduled meeting date the agenda must be published on the CMA website, the Muscat Securities Market (MSM) website and in one daily e-newspaper. The CMA has expressed that this is a temporary reduction in the normal requirement to publish the agenda 15 days in advance of the meeting.
The agenda must be sent to MCDC on or before the end of the next business day following the approval of the CMA. Shareholders and unitholders will be able to view the agenda through their account with MCDC.
The name and investor number of the person proposed to act as secretary of the meeting must also be provided to the MCDC to allow for the shareholders and unitholders to vote on their appointment.
Where it is proposed to elect any new director or fund management at the meeting, signed nomination forms vetted by the legal advisor must be submitted to the CMA at least 5 days prior to the scheduled date of the meeting.
The company or fund must send a profile of each candidate to be hosted on the MSM website at least 3 days prior to the date of the meeting. The details of the candidates set out in the nomination forms must also be uploaded to the electronic platform administered by the MCDC.
The company or fund must coordinate with the MCDC to ensure that the general meeting is convened in an efficient manner, however it is the responsibility of the shareholders and unit-holders to ensure their contact details are correct and up-to-date and neither the company, fund or MCDC will be responsible if a person is unable to participate in a meeting due to incorrect or incomplete details.
Shareholders and unit-holders will be able to vote for the items set out in the agenda starting from 3 days prior to the meeting date up until the end of the voting process for that particular item of the agenda.
Voting via the electronic platform during the course of the meeting will be time-sensitive; there will be a time limit of 5 minutes to vote on any of the general items of the agenda and 10 minutes to vote on the election of directors.
The Decision provides for those who voted in advance of the meeting to be able to change their vote if there is an amendment to a proposal on the day of the meeting and to vote on any new proposal approved to be added to the agenda during the meeting.
The MCDC platform will be linked to the clearing system. If a shareholder or unit-holder votes in advance of the meeting then subsequently sells any of their securities before the day of the meeting their votes will be cancelled, but they will be able to vote any remaining securities again.
Quorum and attendance
Shareholders/unit-holders who have voted prior to the start of the meeting will count towards the quorum. It appears actual attendance either electronically or physically is not required where the person has voted prior to the meeting. The quorum also includes shareholders/unit-holders that are in attendance electronically at the commencement of the meeting or present in person (once physical meetings are permitted).
Any attempt to record attendance in more than one of these three ways will result in attendance being voided. This raises the question how a person who has voted in advance of the meeting can attend the meeting or vote on any amendment to a proposal or new proposal made during the meeting without infringing this rule. We expect this will be clarified in the MCDC guidelines.
If attending via electronic means, proxies are only available to juristic persons. The CMA has explained that the decision not to allow proxies for individuals was made to encourage individual attendance and participation in decision making given the increased ease of attendance through electronic means.
The board of directors, the fund management, external auditor, legal advisors and secretary to the general meeting must sign into the online platform before and during the scheduled meeting time. The Circular does not specify how long prior to the meeting these attendees are required to be present. We would suggest sufficient time to ensure all pre-meeting preparation can be completed in advance of the meeting - 30 minutes prior to the meeting is the accepted practice at general meetings under normal circumstances.
Minutes of the meeting are permitted to be submitted to the CMA by email, but a hard copy must be submitted at the earliest opportunity.