COVID-19: Securities Regulators Issue Guidance for Moving to Virtual AGMs

Articles

With directions and recommendations from all levels of government and health authorities to avoid large gatherings and practice social distancing to the extent possible as a result of COVID-19, companies should consider how their plans for upcoming annual general meetings (“AGM”) are impacted. There are increasing concerns that it is no longer advisable to conduct in-person AGMs, and companies may look to postpone their AGM or consider holding it virtually. The ability of a company to conduct virtual or hybrid AGM (i.e. an in-person AGM that permits virtual participation) is governed primarily by the company’s constating documents and governing corporate statute. In B.C., the Business Corporations Act (British Columbia) permits a company to hold a virtual AGM if expressly provided for in the company’s articles, or with shareholder approval as long as the company’s articles doesn’t expressly prohibit a virtual meeting.

However, in the case of reporting issuers, there are additional considerations under securities laws with respect to providing appropriate notice to the affected parties. On March 20, 2020, the Canadian Securities Administrators (“CSA”) issued guidance to reporting issuers which intend to conduct AGMs during the COVID-19 outbreak. The guidance applies only to business transacted at AGMs, and reporting issuers are encouraged to contact their legal advisor with any questions or concerns with respect to the conduct of special meetings.

If a reporting issuer plans to conduct a virtual or hybrid AGM, it is expected to give timely notice to its securityholders, the parties involved in the proxy voting infrastructure and other market participants, including clear directions on how to access and participate in the meeting. These details should be included in the reporting issuer’s proxy-related materials. However, if a reporting issuer has already distributed and filed its proxy-related materials, the CSA indicated it would be permissible for a reporting issuer to change the date, time or location (including to a virtual location) of its AGM without sending additional or updated proxy-related materials if it:

  • issues a news release announcing the change in the date, time or location;
  • files the news release on SEDAR; and
  • takes all reasonable steps necessary to inform all the parties involved in the proxy voting infrastructure (such as intermediaries, transfer agents, and proxy service providers) of the change.

The CSA also specifically addressed the application of section 2.15 of National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer, which requires that sends a notice to registered holders of a change to its AGM concurrently send the notice to beneficial holders. The CSA’s position is that if a reporting issuer is making a change to its AGM details while following this guidance, no relief from section 2.15 is needed as long as registered holders and beneficial holders are treated equally.

The Capital Markets, Securities and Mergers & Acquisitions group at Clark Wilson LLP will closely monitor developments surrounding the COVID-19 pandemic and continue to provide updates as they become available.