22. Virtual Contested Meetings
WHAT ARE VIRTUAL MEETINGS? Virtual meetings allow shareholders to participate and vote at a meeting of shareholders through an online platform that provides shareholders and proxyholders with the ability to ask questions and vote. Virtual meetings may be held in tandem with an in-person meeting (i.e., a hybrid meeting) or may be held without offering an in-person component. Virtual-only meetings are often audio-only broadcasts in which the chair of the meeting and certain management representatives are given the right to speak in order to call the meeting to order, make motions, call for votes and address questions. Prior to the 2020 COVID-era proxy season it was relatively uncommon for Canadian public companies to hold virtual meetings and almost no issuers held virtual-only meetings. For example, in the 2019 proxy season less than 1% of meetings held by TSX Composite and SmallCap indices issuers were virtual-only. It is now common for Canadian public companies to hold meetings in a virtual-only or hybrid format. AUTHORITY TO HOLD A VIRTUAL MEETING An issuer’s ability to hold a virtual shareholder’s meeting depends on its governing corporate legislation, articles and bylaws. Some statutes, such as the OBCA, allow a shareholders’ meeting to be held by telephonic or electronic means unless the corporation’s articles or bylaws provide otherwise. Other statutes, such as the CBCA, allow a meeting to be held by electronic means only if the corporation’s bylaws expressly permit it. The provisions of an issuer’s applicable corporate statute, its articles and bylaws also determine the means by which electronic voting is permitted and the degree to which shareholders must be able to communicate with each other. Amendments to the OBCA that came into force on October 1, 2023 now give an Ontario corporation the ability, by way of its articles or bylaws, to limit the manner in which a meeting of shareholders may be held and specify requirements that apply with respect to the holding of a meeting of shareholders. The open- endedness of these provisions gives issuers wide scope for creating rules on the holding of shareholder meetings and could invite abuse, such as setting different rules for meetings requisitioned by shareholders or other types of contested meetings. While attempts by an issuer to prescribe discriminatory meeting requirements in its constating documents may not survive a court challenge, the costs of litigation and timeliness of obtaining a court date may put this option out of reach for many shareholders. The OBCA amendments also require that all persons entitled to attend a virtual or hybrid shareholder meeting be able to “reasonably participate.” This requirement may open the door for dissidents to complain that virtual meeting procedures offered at the meeting did not allow them to reasonably participate (for further information, see our bulletin on the OBCA amendments).
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Davies | dwpv.com
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