Key highlights of the Nigerian Stock Exchange’s “Guidance on Companies’ Virtual Board, Committee and Management Meetings.” – Ayotola Jagun

1. Introduction

The onset and spread of the COVID-19 pandemic has caused significant changes in the conduct of business, notably, forcing a global and rapid shift from traditional brick and mortar to remote working. This has inevitably impacted the manner in which meetings are held. Given that virtual meetings have now become a staple for the time being, we need to embrace change and rethink virtual meetings by approaching these interactions practically and strategically. Admittedly, this is an unprecedented step, but these are unique times, which call for leaders to leverage technology to enable prompt and smart decision making through virtual means.

Boards and top management of companies around the world have had to meet remotely to discuss and strategize about how to react to the COVID19 pandemic and its effects on their business and industries as well as the economy. Important decisions regarding business continuity, operations, safety of employees and key stakeholders and cash-flow need to be taken in a rapidly changing global and local environment. The quality of decision-making depends on, among other things, equal access to accurate and current information by key participants as well as the ability to discuss and consider diverse perspectives and effectively risk manage various permutations on an ongoing basis. With specific regard to management, board and board committee meetings, companies have been forced to consider whether to:

1. Hold their usual board meetings as planned, with some organisations opting to increase the frequency of their meetings, and others choosing to postpone these meetings altogether;
2. Reschedule meeting dates, change meeting locations or switch to “virtualonly” or partially virtual meetings; or
3. Take actions such as procuring the consent of directors, through written resolutions as permitted under law.

2. NSE Guidance on Companies’ virtual board, committee and management meetings. 

The NSE, in recognition of the legal and regulatory uncertainties that Nigerian businesses may face in the wake of current economic and social constraints precipitated by the COVID-19 pandemic, and its effect on Management and Board meetings, issued its “Guidance on Companies’ Virtual Board, Committee and Management Meetings” (“NSE Guidelines”) on 15th April, 2020. The purpose of the NSE Guidelines is to ensure that when companies opt to hold virtual meetings, such meetings are conducted in an accessible, transparent, efficient, and cost-effective manner, while meeting the important business and corporate governance needs of all relevant stakeholders.

3. What is the scope and applicability of the NSE Guidelines? 

The NSE Guidelines seek to assist stakeholders with identifying and adopting best practice and procedures, and complying with applicable corporate governance standards whilst conducting virtual meetings.

4. What is a virtual meeting? 

The NSE Guidelines define virtual meetings as “meetings that occur when people, irrespective of their physical location, are able to communicate effectively during pre-scheduled teleconferences, web conferences, or video conferences, with the ability to utilize video, text or audio features via the meeting medium, whilst being in the same virtual space for a specific period.”

5. What are the statutory and regulatory considerations for holding virtual board and board committee meetings? 

The Companies and Allied Matters Act LFN, 2004 (“CAMA”), provides that directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. In the absence of any further directive by CAMA, the NSE Guidelines recommends that the constitutional documents of the Company (Articles of Association, Board, Committee, and Management Charters or Terms of Reference) should provide for and authorize such meetings.

In deciding whether to implement a virtual meeting, the NSE stresses that a company must consider all relevant stakeholders and ensure that meetings are handled in a way that affords remote participants a comparable level of access, as they would have had where they have met in person.

6. How do you hold effective virtual board and board committee meetings? 

It is important for companies to fully consider the actions to be taken on their part, to ensure that board and board committee meetings are conducted seamlessly. To this end, with specific regard to virtual meetings, the NSE Guidelines highlight a range of important factors,some of which include:

1. Strict adherence by the Chairman to the agenda for the meeting, to ensure participants remain focused and are less susceptible to distractions.
2. Informing the Chairman prior to the meeting of the names of the virtual attendees or their authorized representatives, to ensure that the meeting is structured to accommodate all parties and the required technological platforms/support is made available.
3. Securing other remote means (including electronic mail), of reaching participants, who lose their connection during meetings in order to quickly reconnect them, should this occur.
4. Ensuring that the required equipment is made available for virtual meetings. In addition, exploring the possibility of engaging the services of companies specialized in providing virtual meeting assistance and integrating such arrangements into the governance process, for future operations.
5. Enabling “lock out” facilities to temporarily remove participants from meetings in order to discuss matters of conflict. In our experience, this would mean, that where, for example, there are resolutions to be passed in which certain directors have an interest, such directors should be able to recuse themselves from the Meetings by dialling out of the call and rejoining the call after deliberations are concluded and a resolution is reached in a verifiable manner. Another alternative, would be for the meeting host to enable a “break out room”, in which the meeting host is able to split the participants of the meeting into separate sessions automatically or manually, and switch between sessions at any time.
6. Providing robust technical support and engaging technical support staff to promptly attend to all technical or related matters in connection with the virtual meetings.
7. Devising ways to safeguard the security/privacy, confidentiality and quality of virtual meetings.
8. Maintaining confidentiality of discussions and preventing breach of such provisions by 3rd parties.
9. Conducting a dry run/rehearsal prior to virtual meetings to ensure that virtual attendees’ audio, video, and text facilities (as applicable) are functioning well. This is necessary to ensure that attendees can connect, stay connected, and are appropriately engaged during the virtual meeting.
10. Ensuring participants (such as the company secretary, chairperson and other participants) fully comply with established protocols and responsibilities, and adhere diligently to expected conduct.

On a related note, we must state that despite the benefits that virtual meetings bring, the unique set of associated challenges should not be underestimated. Such challenges should be identified prior to the meetings to ensure that mitigants to these challenges are put in place. Some of these possible challenges include:

• Unreliable internet connectivity, insufficient IT infrastructure or equipment, or other technical difficulties, which cause disruptions to meetings;
• Communication breakdown occasioned by failure to adhere to virtual meeting compliance etiquette and protocols;
• Participant preference for physical meetings due to unfamiliarity with digital technology, which might deter the acceptance and use of audio or video conferencing facilities; and
• Increase in cyber and 3rd party confidentiality risks.

7. What does the future hold for virtual meetings beyond COVID-19?

In the current climate, virtual meetings have shifted from being an option to becoming a necessity, However, keeping in mind that three of the biggest benefits that accrue from virtual meetings are time, cost savings and increased productivity, it becomes imperative to reflect on whether companies should begin to strategically capitalize on this efficient alternative as a viable medium and fully integrate it into their operations, giving it a permanent place within the work place post COVID-19.

Admittedly, companies that had in the past, elected to deploy the use of technological facilities, such as audio and video conferencing for the conduct of meetings, whether partially or exclusively are more likely to transition and adapt better to the rapidly evolving environment by leveraging on their already existing virtual meetings infrastructure.

Regardless of the prior level of preparedness or lack of by companies for virtual meetings, we however believe that by conscientiously employing the strategies highlighted in the NSE Guidelines, encouraging a positive remote culture in which the board and management demonstrate a willingness to adjust their mindsets to the current circumstances and upgrading investment in IT as a conduit to attaining company’s success and longevity, boards of companies can and will continue to function fully and effectively remotely.

Ultimately, the success of an organization is rooted in its ability to embrace change, expand capacity and progressively navigate difficult or new terrains, in a manner that does not hinder or adversely affect the successful functioning of its leadership.

Are you ready for our new virtual reality?

Ayotola Jagun is the Chief Compliance Officer & Company Secretary, Oando PLC and Busayo Balogun-Agusto, Governance officer, Oando PLC