Spotlight: Guidelines for Virtual Meetings on Significant or Contentious Matters
1. OBTAIN THE CONSENT OF PARTIES THAT MAY OBJECT TO A VIRTUAL MEETING Shareholders and proxyholders log in to a virtual AGM with a unique code often referred to as a “control number.” However, it is possible for that control number to be given to, or stolen by, someone who does not have legal authority to vote the associated shares. Unlike a traditional in-person meeting where the scrutineer verifies the identity of each attendee, verification is impossible in a virtual context and could lead to the validity of the voting results being called into question. Although this is an issue for every virtual- only and hybrid-virtual AGM, meetings involving contested director elections or the approval of a transaction for which there is significant shareholder opposition can exacerbate litigation risk. It would be prudent for issuers to address this problem before it arises, if possible. For a contested director election, the issuer might explore whether a dissident shareholder would be willing to enter into a negotiated meeting protocol agreement that provides that the inability of the scrutineer to verify voters’ identities will not constitute a basis on which to dispute the meeting results. In a transactional context, similar comfort may be obtained via a court order, particularly if the transaction is a plan of arrangement for which court approval is already required.
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Governance Insights 2020
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