With the 2020 proxy season well underway, the COVID-19 pandemic has forced many issuers to consider changing their annual shareholders’ meeting format from a customary in-person meeting to a virtual setting. Since the beginning of the COVID-19 crisis, specifically between March 1, 2020 and April 14, 2020, we monitored issuers listed on the Toronto Stock Exchange (“TSX”) and the TSX Venture Exchange (“TSX-V”) with regards to their 2020 annual shareholders’ meetings. Our key takeaways are summarized below.
Virtual meetings have become the new norm – More than 160 TSX and TSX-V issuers announced that they will use virtual technology to hold their 2020 annual shareholders’ meeting (either by fully virtual, hybrid or webcasting means). Of these, more than 145 issuers opted for fully virtual or hybrid formats, both of which allow for remote shareholder voting and participation, representing a significant increase since 2019 as illustrated below.
Fully virtual meetings take the lead – As illustrated below, fully virtual meetings are the most popular meeting format, as opposed to hybrid meetings (an in-person meeting with virtual voting and participation) and in-person meetings with live webcast.
Electronic means used: audio webcasting is the standard – As illustrated below, a majority of virtual meetings use audio webcasting, rather than video. This trend is a result of greater demand on network infrastructure in the current COVID-19 context, which may render video webcasting less reliable on occasion. Furthermore, the popularity of audio webcasting reflects cost concerns and the relative ease of setting up an audio webcast compared to a video webcast. In most cases, audio and video meetings are conducted using specialized voting platforms.
Announcement procedures vary – Of the issuers holding a fully virtual or hybrid meeting, 25% had previously announced an in-person meeting and were therefore obliged to amend their public disclosure. The chart below illustrates how the amendment was publicly announced.
Specialized platforms gain in popularity – Lumi Global and, to a lesser extent, Broadridge Financial Solutions, are the two most commonly used platforms for fully virtual and hybrid meetings in the 2020 proxy season. As an alternative to using these specialized service providers, issuers are relying on traditional webcasting platforms or conference calls via dial-in numbers.
As the COVID-19 crisis has compelled issuers to rapidly adapt their customary in-person shareholders’ meetings, we expect that positive experiences with electronic meeting formats in the 2020 proxy season will result in a permanent virtual shift for many public companies. In any case, this trend will be closely monitored by proxy advisory firms, which may lead to the adoption of new governance best practices tailored to virtual meetings in a post COVID-19 context.
For a more comprehensive legal analysis of the topic, we invite you to consult the following articles:
The authors wish to thank Neil Wiener, Jean Michel Lapierre, Gilles Leclerc and Andrea Kruyne for their contribution.