Ontario provides additional temporary relief to Ontario business corporations for their shareholder and director meetings

27 avril 2020

On April 24, 2020, Ontario updated its temporary relief for corporations incorporated under the Business Corporations Act (Ontario) (the OBCA) in relation to shareholder meetings, as well as director meetings, under the Emergency Management and Civil Protection Act (Ontario). This article outlines the impact of this relief for Ontario business corporations that are dealing with their annual shareholder meetings and director meetings.



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In light of the challenges presented by the COVID-19 pandemic and the restrictions on gatherings of people, the proper convening of shareholder meetings has become increasingly difficult. Corporations are turning to virtual meetings as an alternative to hosting physical meetings in light of these restrictions (see our articles on virtual shareholder meetings Part 1 and Part 2). Faced with the challenges of hosting a shareholder meeting (or director meeting) in an emergency situation, Ontario has, by way of regulation, temporarily suspended certain provisions of the OBCA and replaced them with appropriate accommodations.

Time extension for shareholder meetings

Under section 94(1) of the OBCA, companies are required to call an annual meeting of shareholders not later than eighteen months after the company comes into existence and subsequently not later than fifteen months after holding the last preceding annual meeting.

In this emergency situation, Ontario is providing additional time for Ontario corporations to host their shareholder meetings as follows:

  • If the last day on which a meeting is required to be held is a day that falls within the period of the declared emergency, the last day on which the meeting is required to be held is no later than the 90th day after the day the emergency is terminated.
  • If the last day on which a meeting is required to be held is a day that falls within the 30-day period that begins on the day after the day the emergency is terminated, the last day on which the meeting is required to be held is no later than the 120th day after the day the emergency is terminated.

The directors of a corporation can call a meeting on the foregoing basis at a time that enables the corporation to comply with these new timelines and that is reasonable in the circumstances.

Shareholder meetings by electronic means

Section 94(2) of the OBCA provides that unless the articles or by-laws provide otherwise, a meeting of shareholders may be held by telephonic or electronic means.

In this emergency situation, Ontario is overriding this provision. Despite any provision in the articles or by-laws or a unanimous shareholder agreement that provides otherwise, a meeting of shareholders may be held by telephonic or electronic means and a shareholder who, through those means, votes at the meeting or establishes a communication link to the meeting shall be deemed for the purposes of the OBCA to be present at the meeting. Importantly, this opens up the option of hosting a virtual shareholder meeting for Ontario corporations without having to amend their articles or by-laws to facilitate such a meeting.

Notice of shareholder meetings

Section 96(1) of the OBCA requires an offering corporation to send a notice of the time and place of a meeting of shareholders not less than 21 days and, in the case of any other corporation, not less than ten days, but, in either case, not more than 50 days, before the meeting,

  1. to each shareholder entitled to vote at the meeting;
  2. to each director; and
  3. to the auditor of the corporation.

In this emergency situation, if a notice of meeting has already been sent for a meeting to be held on a day that falls within the period of the declared emergency and, after the notice is sent, the date, time or place of meeting is changed in order to hold the meeting by telephonic or electronic means, another notice of meeting is not required to be sent but the person entitled to receive the notice must be informed of the change in a manner and within a time that is reasonable in the circumstances. We expect that corporations will issue press releases to inform shareholders of changes to the date, time or place of a meeting.

Voting at shareholder meetings

Section 103(1) of the OBCA provides that, unless the by-laws of the corporation otherwise provide, voting at a meeting of shareholders shall be by show of hands, except where a ballot is demanded by a shareholder or proxyholder entitled to vote at the meeting. Section 103(2) of the OBCA provides that a shareholder or proxyholder may demand a ballot either before or after any vote by show of hands.

In this emergency situation, where a meeting of shareholders is held by telephonic or electronic means, the chair will conduct the vote by a show of hands or by a ballot, if feasible, otherwise the chair may direct voting by alternative means. This relief provides more flexibility in connection with the use of electronic voting for virtual meetings.

Information for annual shareholder meetings

Section 154(1) of the OBCA requires the directors to place before each annual meeting of shareholders:

  1. in the case of a corporation that is not an offering corporation, financial statements for the period that began on the date the corporation came into existence and ended not more than six months before the annual meeting or, if the corporation has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting;
     
  2. in the case of a corporation that is an offering corporation, the financial statements required to be filed under the Securities Act (Ontario) and the regulations thereunder relating separately to,
     
    1. the period that began on the date the corporation came into existence and ended not more than six months before the annual meeting or, if the corporation has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting, and
       
    2. the immediately preceding financial year, if any
       
  3. the report of the auditor, if any, to the shareholders; and
     
  4. any further information respecting the financial position of the corporation and the results of its operations required by the articles, the by-laws or any unanimous shareholder agreement.

Notwithstanding earlier relief extending the timing for shareholder meetings, this provision in the OBCA effectively required a corporation to convene a meeting of shareholders within 6 months of its year end so the directors could place this financial information before the meeting.

The updated relief addresses this provision such that it also applies to annual meetings of shareholders held on a date that is in the period that begins on March 17, 2020 and ends on the 120th day after the day the declared emergency is terminated.

Director meetings

Section 126(13) of the OBCA provides that unless the by-laws otherwise provide, if all directors of a corporation present at or participating in the meeting consent, a meeting of directors or of a committee of directors may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a director participating in such a meeting by such means is deemed to be present at that meeting.

In this emergency situation, Ontario is overriding this provision. Despite any provision in the articles, by-laws or a unanimous shareholder agreement that provides otherwise, a meeting of directors or of a committee of directors may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously and a director participating in such a meeting by such means is deemed to be present at the meeting.

Finding the best path forward for your company

The spread of COVID-19 and the declaration of an emergency in Ontario has posed challenges for some corporations hosting their shareholder and director meetings. The updated temporary relief provides solutions for some of these challenges. We recommend consulting with your legal counsel at an early stage to ensure all applicable laws are being complied with.  


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