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POST OFFICE LIMITED
BOARD REPORT
Amendments to the Articles of
Association
Alison Hoyland, Deputy Company
Secretary
Christian Spelzini, Head of Legal
Corporate, Banking and FS
Title: Meeting Date: I 01 March 2024
Rachel Scarrabelotti, Group
Author: Company Secretary
Sponsor:
Input Sought: Approval
The Board is asked to:
i. Approve amendments to the following Articles of Association (AoA):
— Article 8.1(AA)(a)(v)?
— Article 63?
A tracked changed version of the AoA is attached at Appendix 1.
ii. Approve and authorise the Company Secretary to submit a special resolution in the form
contained at Appendix 2, to request Shareholder consent to the amendments.
Executive Summary
1. Shareholder consent: Leases/hire purchase
The POL Board and POL’s sole shareholder approved the adoption of a new set of AoA on
19 March 2020. One of the Articles included in the new AoA (Article 8.1(AA)(a)(v))
required POL to obtain approval from its shareholder in respect of any amounts
outstanding under any arrangement entered into in the ordinary course of its business
for the leasing or hire purchase of any assets, which would, in accordance with GAAP, be
treated as a balance sheet liability.
Shortly before the adoption of the new Articles, the accounting standards, in particular
IFRS 16, had changed such that a lessee was required to recognise nearly all leases on
the balance sheet which will reflect their right to use an asset for a period of time. The
impact of this change is that technically in the vast majority of cases POL would be
required to seek DBT approval prior to entering into a lease or hire purchase of assets.
Upon identifying this issue, the point was raised with UKGI and DBT and they accepted
that this was not the intention of the Article. On 8 February 2023, UKGI confirmed that
‘“BEIS (now DBT) does not intend to bring a claim for a breach of Article 8.1(AA)(a)(v),
whether retrospectively or otherwise, while we agree an appropriate amendment to the
Articles.’
UKGI and DBT have now confirmed that they are happy to remove this Article.
2. Resolutions in Writing
1 Article 8.1(AA) provides for Shareholder consent in relation to borrowing; sub-paragraph (a)(v) provides that amounts
outstanding certain from lease or hire purchase arrangements shall be taken into account as money borrowed.
? Article 63 provides for resolutions in writing to be signed by all Directors.
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Under POL’s current AoA, a Written Resolution can only be passed if signed by all
Directors. The Board's inability to conduct business this way currently, due to the
availability of all Directors, has highlighted the limitations of this requirement.
It is proposed, therefore, that the AoA be amended to provide for Written Resolutions for
Board business to be passed if signed by 75% of Directors, to allow for efficient and
effective decision-making. It is not proposed to change the Written Resolution provisions
for Committee business, where all members of the Committee will be required to sign a
Written Resolution to pass the business.
The proposed amendment has been discussed informally with UKGI colleagues, who are
supportive of the amendment.
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Appendix 1 - Tracked changes version of the
Articles of Association
Appended.
Appendix 2 - Shareholder Special Resolution
Appended.
Confidential