Governance Insights 2024
established by a committee against other board members: (i) by ex ante agreement; (ii) openly and with the knowledge of the excluded director by appointing a special committee that engages its own counsel; or (iii) once sufficient adversity exists between the director and the corporation to the extent that the director can no longer have a reasonable expectation that he or she is a client of the board’s counsel. To date, we are not aware that this issue has been tested in Canadian courts; however, we anticipate that in light of recent jurisprudence and other potential regulatory developments, board special committees may be established with greater frequency as a conflict-management tool. That trend, coupled with ever-increasing scrutiny on board decision-making processes, suggests that board committees should focus at an early stage on how best to manage matters of privilege and confidentiality.
9 | Virtual-Only Shareholder Meetings: A Relic of the Pandemic?
Prior to the 2020 COVID-era proxy season it was relatively uncommon for Canadian public companies to permit virtual attendance at shareholder meetings, and almost no issuers held virtual-only meetings. During COVID, it became increasingly common for Canadian public companies to hold meetings in a virtual-only or hybrid format, and it appears some issuers are hesitant to move back to a traditional in-person meeting with its attendant costs and, in some cases, exposure to shareholder scrutiny and public criticism. Indeed, the practice of holding virtual-only shareholder meetings is receiving push-back from proxy advisors and shareholder rights advocates—a trend we expect will continue into the coming 2024 proxy season. In its 2024 report, Glass Lewis noted that a growing number of companies have elected to hold virtual-only shareholder meetings and expressed concern given that virtual-only meetings have the potential to curb the ability of a company’s shareholders to ask questions and meaningfully participate in the meeting. Glass Lewis recommends voting against the chair of the governance committee if a board is planning to hold a virtual-only shareholder meeting where specified procedural and disclosure criteria are not satisfied. In 2024, we expect that proxy advisors and shareholder advocates will be keeping a close eye on the use of virtual-only meetings and the manner in which shareholders are permitted to participate. While issuers may view virtual meetings as way to save costs, to avoid unwarranted scrutiny issuers should seek to provide a meeting platform to shareholders that ensures, to the extent practicable, that they have the same rights and opportunities to participate as they would at an in-person meeting.
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Davies | dwpv.com
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