CHAPTER 05 Let’s Take This Online: Virtual Shareholders’ Meetings in 2020 and Beyond
Considerations for Future Virtual Shareholders’ Meetings GOVERNING LEGISLATION AND CONSTATING DOCUMENTS An issuer’s ability to hold a virtual shareholders’ meeting depends on its governing corporate legislation, its articles and its bylaws. Some statutes, such as the OBCA, allow a shareholders’ meeting to be held by 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. Corporate statutes also differ in whether and how quorum for a virtual meeting is established. The provisions of an issuer’s applicable corporate statute and its 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 at a virtual meeting. Some statutes are so restrictive that an issuer may need to obtain a court order to hold a virtual-only meeting. For example, certain major Canadian banks and life insurance companies issued a joint statement in March 2020 announcing that they had obtained a court order allowing them to hold their respective AGMs through electronic means and authorizing alternative delivery methods for their proxy materials, which was not otherwise permitted by their governing legislation. Issuers that are considering switching to a virtual format in the future and that have not already done so will want to start reviewing their governing legislation, articles and bylaws to determine what, if any, amendments may be necessary or desirable to facilitate virtual participation and/or voting at their 2021 and future AGMs.
OTHER TOP CONSIDERATIONS The decision whether to hold some form of virtual AGM in the 2021 proxy season and beyond will be influenced in large part by COVID-19 and the prevailing state of affairs from both health and legal perspectives. For example, ISS and Glass Lewis have taken a pragmatic approach to 2020 virtual-only AGMs in response to COVID-19; however, as the health crisis dissipates (as we hope), proxy advisory firms could revert to their traditional anti-virtual-only meeting stances, rendering the holding of a virtual-only AGM too risky for some issuers. The health and safety of an issuer’s stakeholders will also continue to be of paramount importance. As discussed in Chapter 8, ESG and Climate Change in the Shadow of COVID-19: “E,” “S” & G Are Here to Stay, environmental, social and governance (ESG) issues continue to attract increased attention, making it more important than ever for each issuer to evaluate its particular circumstances in determining whether to hold a virtual-only or hybrid-virtual AGM in 2021. This decision will be informed by a variety of factors, including the associated costs, the relative composition of its retail and institutional shareholder base, the past and expected impact of a virtual format on shareholder turnout and participation, its peer group’s practices, the potential impacts of an in-person meeting on the health and safety of its shareholders and other stakeholders, any continuing restrictions on travel and in-person gatherings and the nature and expected controversy of the business to be considered at the AGM. An issuer’s ability to hold a virtual shareholders’ meeting depends on its governing corporate legislation, its articles and its bylaws.
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Davies | dwpv.com
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