In January 2018, we posted this article on Timely Disclosure, “Bringing Your Annual Meeting into the Digital Age”. Virtual annual meetings have become highly relevant in light of the Coronavirus or COVID-19 pandemic. Shareholders may well be reluctant to attend annual meetings; numerous public companies are examining measures they can take so that COVID-19 does not spread, including eliminating public events.
In our 2018 article, we noted that the Canada Business Corporations Act (CBCA) and provincial corporate statutes provide a legal framework for a traditional shareholders’ meeting, that is, a “physical meeting” attended by shareholders, and for a “virtual meeting”, in which all shareholders participate entirely by electronic means. We noted that a traditional physical meeting is often a lost opportunity to maximize shareholder participation. On the other hand, a virtual meeting, available only online, presents technical issues, notably with respect to registration of shareholders as well as voting and speaking during the meeting, all of which entail additional costs.
In light of the COVID-19 situation, a “hybrid” annual meeting, that is, a substantially scaled-down physical meeting with a webcast of the proceedings, provides corporations with a cost-effective means of complying with their legal obligations and supporting shareholder engagement, while substantially reducing, if not eliminating, physical interaction among participants. The corporation can issue press releases encouraging shareholders to vote by proxy prior to the annual meeting and directing them (and others) to the corporation’s website or other platform, where they will be able to access the webcast of the meeting and submit questions in writing through the webcasting platform. As we identified in 2018, the only people who have to be present at the meeting are, for quorum purposes, one or more proxy holders, depending on the specific requirements of the corporation’s by-laws; the chairperson and secretary of the meeting (both of whom can be proxyholders); and a scrutineer (typically from the corporation’s transfer agent and registrar), in short, as few as three people. While registered shareholders and proxyholders have the legal right to attend a hybrid meeting in person, the corporation can encourage them by way of press release and other communications to view the meeting online, in accordance with the recommendations of Canadian public health authorities.
In the 2018 article, we discussed whether the webcast of the meeting should be made available to shareholders only, or to everyone. If one objective of an annual meeting is to raise the corporation’s profile in the investment community, our view is that the meeting should be open to all.
At a time when “self-isolation” has become a common term, we believe that hybrid or virtual annual meetings will be accepted, if not welcomed, by shareholders and the investment community. As we wrote in 2018, as technology improves, as it inevitably will, virtual annual meetings of Canadian public companies will become more prevalent and eventually the norm. COVID-19 is accelerating that process.
For those issuers who want to better understand virtual meetings, Timely Disclosure will post an article addressing the technical issues involved in holding a virtual meeting.