With the progression of COVID-19, the Canadian Securities Administrators (CSA) have published guidance on conducting shareholder meetings during the outbreak. This article outlines the CSA guidance and is a follow-up discussion to our previous MarketCaps.
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In our previous MarketCaps, we discussed the considerations for planning a virtual or hybrid shareholder meeting in lieu of a traditional, in-person meeting. This article summarizes CSA guidance applicable to reporting issuers on the use of these meeting methods and the steps to change the time, date or location of an in-person shareholder meeting or to switch to a hybrid or virtual meeting.
The CSA's guidance is generally applicable to all business transacted at shareholder meetings of reporting issuers; however, the CSA cautions that reporting issuers involved in proxy contests, holding special meetings for merger and acquisition transactions or obtaining approval for transactions under Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions should contact their principal regulator to discuss what steps would be appropriate in those circumstances.
As previously discussed, issuers should also be mindful that they must comply with applicable corporate law and their constating documents in connection with holding or changing a shareholder meeting. Both the Toronto Stock Exchange and the TSX Venture Exchange have granted relief from their annual meeting deadlines – see our MarketCaps.
Calling a Virtual or Hybrid Shareholder Meeting
If a reporting issuer plans to conduct a virtual or hybrid shareholder meeting, the CSA expects the reporting issuer to notify securityholders, parties involved in the proxy voting infrastructure, and other market participants of their plans in a timely manner, and to disclose in their meeting materials clear directions on the logistical aspects of the meeting.
What Should You Include In Your Meeting Materials for a Virtual/Hybrid Shareholder Meeting?
In addition to the details typically disclosed in its meeting materials, a reporting issuer should provide clear directions on the logistical details of the virtual or hybrid meeting, including:
- how to remotely access the meeting;
- how to participate in the meeting; and
- how to vote at the meeting.
Reporting issuers should also consider disclosing the possibility of changes to the meeting due to COVID-19.
Changing an In-Person Shareholder Meeting or Switching to a Virtual/Hybrid Shareholder Meeting
Many issuers have begun to consider changing aspects of their previously announced shareholder meetings in response to the pandemic. The CSA has clarified that a reporting issuer who has already sent its meeting materials may notify securityholders of a change in the date, time or location of an in-person meeting or the switch to a virtual or hybrid meeting due to difficulties arising from COVID-19 without preparing or sending additional materials if the reporting issuer:
- 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 expects reporting issuers to disclose changes using the above methods promptly and sufficiently in advance of the meeting to ensure the market receives this information in a timely manner.
The CSA has further clarified that, in the ordinary course, a reporting issuer will not need to obtain an exemption from its obligation to notify beneficial shareholders of changes to its shareholder meeting if registered and beneficial owners are treated equally and receive the same information.
Finding the Best Path Forward for Your Company
COVID-19 poses significant challenges to the conduct of business and hosting shareholder meetings. We recommend consulting with legal counsel and your transfer agent at an early stage to assist with preparation of the necessary disclosure for meeting materials and to help find the approach that works best for your company. We understand that companies are faced with challenges, both logistical and financial, to navigate during these uncertain times, and we are here to assist your company at every part of the journey.