Coping with COVID-19: 5 Steps to Compliant Socially Distant AGMs
Published:
March 17, 2020
Author(s):
Business corporations laws and stock exchange policies mandate that issuers hold annual general meetings (AGM) and set requirements for when and how those meetings must take place. But there are times when typical in-person meetings aren’t desirable or possible. One such time is during a disease outbreak like the 2020 COVID-19 novel coronavirus outbreak: organizations must meet their legal obligations, while practicing the social distancing that public health authorities recommend, at an event designed to bring together investors, financial analysts, news media and other interested parties with the organization’s management team. There are alternatives to typical in-person meetings that both allow organizations to meet their legal obligations and incorporate social distancing:
Virtual meeting. A virtual meeting occurs entirely electronically, with all participants attending and voting using electronic means.
Hybrid meeting. A hybrid meeting allows for both in-person and electronic attendance and voting.
In-person meeting with remote access option. An in-person meeting that permits attendees to watch proceedings and submit questions online, this alternative allows shareholders to remain engaged while maintaining social distance. However, attendees watching online don’t have the ability to vote and aren’t counted as present at the meeting.
Organizations can follow these five steps to select the socially distant meeting alternative that will work for them.
- Check your governing legislation
Determine whether the business corporations legislation that applies to your organization allows for electronic attendance or voting at a meeting. For example, the Canada Business Corporations Act (CBCA) allows electronic participation at a meeting of shareholders by means of a communication facility that permits all participants to communicate adequately with each other during the meeting, and deems each person participating electronically as present at the meeting. The CBCA also allows for electronic voting so long as the voting facility meets certain requirements.
- Review your by-laws
If your governing legislation permits electronic attendance or voting, determine whether your by-laws (or similar constating documents) permit electronic attendance or voting at meetings and if so, whether they impose any limitations. Also check the quorum requirements to evaluate how you could achieve quorum at the meeting, whether through electronic or limited in-person attendance.
- Assess available services
Weigh the availability and cost of services for the meeting alternative that will work for you. The number of service providers with platforms satisfying the CBCA’s requirements for electronic attendance and voting is small, and their schedules will inevitably fill up quickly as social distancing restrictions expand. Videoconferencing and webcasting services, on the other hand, are more widely accessible.
- Consider postponing
The rapidly evolving nature of the COVID-19 situation and of business responses to it makes it difficult to plan weeks or months in advance for the possibility of in-person attendance at meetings. Postponing your meeting date could buy time until circumstances improve, but remain mindful of the annual meeting deadlines your governing legislation or stock exchange policies impose.
- Communicate, communicate, communicate
Inform your shareholders and other invited guests of their options for attending and participating in the meeting. Depending on how much time you have before the meeting, you could include disclosure in your management information circular, in a news release, or both.
Please contact your McInnes Cooper lawyer or any member of our Corporate Finance & Securities Team @ McInnes Cooper to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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