CHAPTER 05 Let’s Take This Online: Virtual Shareholders’ Meetings in 2020 and Beyond
Spotlight (Cont'd)
2. CONSULT THE ISSUER’S PRINCIPAL SECURITIES REGULATOR A reporting issuer should consult its principal securities regulator prior to proceeding with a virtual-only meeting at which significant or contentious business will be considered. Securities regulators’ primary concern is to ensure that all shareholders have the right to participate at the meeting. Regulators have broad public interest powers that they can use if they believe that an issuer is holding a virtual-only meeting for tactical reasons or in a manner that otherwise disenfranchises shareholders. Candour and transparency prior to any public announcement that a meeting will be virtual-only can go a long way to avoid costly and potentially embarrassing issues down the road. 3. CONSIDER POTENTIAL ISSUES WITH DEMONSTRATING FAIRNESS FOR A PLAN OF ARRANGEMENT A transaction that proceeds by way of a plan of arrangement requires court approval, which in turn requires an issuer to demonstrate that the arrangement is “fair and reasonable.” This is achieved in part through various procedural protections that an interim court order sets out for the meeting at which shareholders will be asked to approve the transaction. A common provision in such orders is that shareholders and proxyholders will be entitled to attend and speak at the meeting. A court may have concerns if shareholders are unable to ask questions or question the transaction to the same extent that they otherwise could if the meeting were held in person. An issuer’s proxy materials should invite shareholders to submit questions and comments in advance of a virtual-only meeting, and these should be read at the meeting. To the extent possible, an issuer should work with its virtual meeting service provider to give shareholders or proxyholders wishing to speak the means to do so.
4. MAXIMIZE COMMUNICATION AMONG SHAREHOLDERS AT THE MEETING Some corporate statutes require that all meeting participants be able to communicate “adequately” with each other during the meeting. However, exactly what constitutes adequate communication is unclear. Most virtual meeting platforms allow issuers to control whether questions or comments submitted during the meeting are visible only to the issuer or can be seen by the other attendees. When putting special business to shareholders, issuers should err on the side of maximizing disclosure to pre-empt any disgruntled shareholders’ challenges after the meeting that could allege it was not held in compliance with applicable law.
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Davies | dwpv.com
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