Cyndi: Okay. It';s one o';clock so why don';t we get started. Good afternoon to everyone and welcome to Gowling WLG';s webinar, Canadian Public Companies and COVID-19. Today our panel will discuss some of the key issues facing Canadian public companies as a result of the pandemic, including disclosure considerations, available regulatory relief from certain public company requirements and the holding of virtual AGMs. We';ve already hosted several webinars relating to the impact of COVID on M&A transactions as well as financing activities. We';ve listed our past and planned webinars on the next couple of slides. If you missed any of the webinars in our series on demand versions of each webinar is posted on the Gowling WLG website. Before we get started with today';s presentation there';s a couple of housekeeping points. To view the presentation and all speakers please click on the speaker view in the upper right hand corner of your screen. For questions throughout the session please use the Q&A button on the bottom of your screen. We';ll try our best to answer some of your questions towards the end of the session and you should feel free to reach out to any of the panelists if you have any follow up afterwards. This presentation is being recorded, and it will be posted on our website in a few days, if you';d like re-review any of the sections. For those of you who are lawyers this program counts for 1 hour of Continuing Professional Development credits in applicable jurisdictions. Details of those credits are set out on the invitation to the webinar. Because this presentation is being put on by lawyers we would be remiss if we didn';t include a legal disclaimer so here it goes. Today';s session will be a high level overview for general information purposes and does not constitute legal advice. Information has been summarized and paraphrased for presentation purposes only. Examples have been provided for illustration purposes. Responsibility for making sufficient and appropriate disclosure and complying with applicable securities laws remains with the company. Each company';s situation is different. For specific legal advice to the topics discussed today please contact your legal counsel. Information in this presentation reflects securities laws and other relevant standards that are in effect as the date of this presentation. Now on to our panelists. Our presenters today all have extensive experience in acting for publicly listed companies and have first hand experience in providing guidance to such companies during this unprecedented time. Therefore they will be able to provide both an overview of the legal considerations that will be relevant to public companies as well as offer practical insights based on their first hand experiences. So starting in our Eastern offices we have Kathleen Ritchie, a partner in our Toronto office. Warren Cass, an associate in our Toronto office. Michael Garrellek, a partner in our Montreal office and moving to our Western offices, we have Martin Mix, a partner in our Calgary office and myself, I';m Cyndi Laval, I';m also a public company lawyer and a partner in our Vancouver office, and I';ll be moderating today';s session.
Let';s turn to our agenda. For the next hour Warren and Martin will be discussing how public company disclosure has evolved since March as well as providing some key guidance offered by the Canadian Securities regulators on MD&A forward looking statements and material change reporting. Martin and Michael will give an overview of some of the blanket regulatory relief and Canadian Securities regulators have granted to listed ... shares and the impact of this relief. Finally, Kathleen will lead a discussion with Martin, Warren, Michael and myself about how to conduct a virtual AGM and the potential challenges of this format. Of course, during each topic we will address some practical implications and share with you some real life stories. Again, we want this to be an interactive discussion so please share your questions with us and we will try and address them at the end.
Let';s turn to our first topic, disclosure obligations for public Canadian companies. It';s critical for companies grappling with the impact of COVID-19 on their businesses to consider their disclosure obligations and make reasoned and informed judgments about communications to the market. At this stage, the uncertainty about the magnitude and duration of the pandemic may make it impractical for most issuers to quantify its impact on their businesses. For issuers, even if issuers have suffered a direct material impact already. However, it';s becoming increasingly likely that the impact ultimately will be material for most issuers. As a result of this uncertainty, Canadian public issuers will need to decide, almost in real time, what to disclose regarding the pandemic';s implication for their businesses and when to disclose it in order to satisfy their disclosure obligations. Now that we have a couple of months behind us, certain trends are emerging and the regulators have provided some guidance. So I';ll turn the session to Warren and Martin now to discuss some of the disclosure considerations that will be most relevant to public companies.
Warren: Thanks so much, Cindy. Thank you for the introduction. So today Martin and I will cover MD&A, material changes and material change reporting and forward looking information. Turning first to MD&A. The overall purpose of this document, which I';m sure you';re aware, is to provide a narrative explanation from the perspective of management of what financial statements show and don';t show. These are things that are not obvious or self-evident from the numbers. The securities regulators expect issuers to provide information and discussion of trends and risks that are affecting their financial results and that are reasonably likely to affect them in the future. There are few sections that COVID is going to pop up in as an important consideration when drafting your MD&A. The first of which is the discussion of operations section. This is the part of the MD&A where you discuss factors affecting the relationship between cost and revenue that the business has realized. Management provides it';s analysis of operations, revenue, sales, cost of sales that communicate expectations to the market about how they';re going to develop the milestones they';re hoping to achieve and the cost of achieving those milestones. As well, discuss risks and uncertainties that materially affect their future performance. In light of COVID there are a few parts of this discussion that might be affected. Issuers may be experiencing changes in revenue from ordinary operations. They may be experiencing different costs of sales than they used to and differences in overall gross profit. There might be revisions to the expectations with respect to objectives and milestones that they hope to achieve and there might be a need to communicate those revisions to the public. There also might be instances where issuers have chosen to reallocate the proceeds of financings from what they previously disclosed they would be using those proceeds for. That is required to be disclosed in this section as well. So the most recent guidance from the Canadian Securities administrators is that they want to see, where possible, quantification and very specific discussion on these points. If, for example, COVID has affected demand for products and services that the company provides you might consider saying, "We';ve experienced a 15% decrease in sales versus the comparable quarter." as opposed to merely saying a decrease. If there have been supply chain or distribution channel issues you would want to discuss the effect of border restrictions, the availability of raw materials, international logistics, whatever the cause is for those issues might be. If you have some of your locations that have been closed due to emergency orders. Rather than merely saying that you might give the flavour of, "We have closed 100 out of 500 of our stores and they will remain closed." If there have been breaches of material contracts those are key issues that should be discussed here as well. Workforce and age are changes is something we';ve seen quite a bit of with disclosures such as numbers of employees for load and dollars and cents and percentages of budget the companies have been able to save as a result of those workforce reductions. One key discussion that the market will be looking for in this section is, if your business has been significantly affected, what measures have you implemented to adapt to the new environment in which you are operating, and what expected changes to your business plan will be affected on a going forward basis. Have you deferred any capital expenditures that you had disclosed you planned to undertake and what is the dollar value of those capital expenditure deferrals? Another important subject in this part of the discussion is the impact of government support and insurance payouts. You could say that the company has received, or is eligible for X dollars in loans, lease subsidies, wage subsidies. These kinds of considerations, always being conscious, where possible to give quantification. On the topic of financial capacity I';m going to turn this over to Martin to discuss MD&A discussions of liquidity and capital resources.
Martin: Thanks, Warren. Among other things, another critical item that an issurer is required to specifically describe in its MD&A is it';s liquidity position and availability of capital resources. The purpose of this disclosure is to provide investors with inside into the adequacy of access to cash on hand and financing available to meet working capital requirements and planned capital investment. Including disclosure relating to trends and expected fluctuations. However, frankly, this disclosure from time to time can tend to be boiler plate for issuers with very little variation over reporting periods. However, CSA has provided guidance and stresses that this is probably not appropriate in the current circumstance, and that issuers should specifically consider and describe the impact of COVID-19 on their liquidity position and resources, rather than just relying on boiler plate or updating past discussions which may not have considered the impact of the pandemic. In CRA';s view, specific points an issurer should discuss include how COVID is impacted an issuers liquidity position, it';s error collection and whether there are any issues or if new credit terms have been offered, its ability to satisfy contractual liabilities, including debt liabilities and obligations, lease payments, earn ins and options, etcetera. Disclosure should also speak about any defaults and arrears that have occurred or expected, and how the company plans to deal with them, and any change to the companies dividend or distribution policies. I think, as a result, the issuers will have to consider the liquidity position more carefully and provide more detail disclosure than they have in the past, bearing in mind these critical points that the CRA has raised. Back to you, Warren, to discuss risk factors.
Warren: Okay. We have reviewed a number of public disclosure filings on SEDAR and these suggest that a majority of issuers have turned their attention disclosing risk factors related to COVID-19. But many of them are still using broad all inclusive risk factors relating to disease outbreaks and pandemics, inserting where applicable, references to COVID-19. For example, our business results of operation and financial condition could be adversely affected by the outbreak of contagious disease such as COVID-19. Or perhaps listing COVID-19 as one of the things that is covered by the catastrophic events risk factor that also talks about things like natural disasters, wars, political disruption, force majeure events in general. However, those were good disclosure at the beginning of March and perhaps in a past disclosure cycle when the affects of COVID-19 on businesses were still very much unclear and uncertain and there were a lot of question marks. Now, there is still a lot of question marks but management has had time to digest some of the implications and things may have become a little bit clearer. At this time it would be prudent to add more robust and specific risk factors instead of, or as a supplement to the broad hypothetical ones. This CSA has said they, again, want issuers to avoid boiler plate risk factors and to be as specific as possible. There are a number of possible ways that businesses could be facing risk. I';m not going to list all of them, but I';m happy to discuss them, as would your counsel be. But for example, if we were to hypothetically say that there was a meat processing plant, to pull an example from the news. It was a public company, in making disclosure, they might consider talking about their reliance on a skilled labour force that cannot be quickly replaced in cases of mass absences, resulting in potential decreased production or plant closures. They might talk about the inability to fully mitigate health and safety risks, due to the necessity of physical proximity of their workers, and consequent risks of legal liability as a result. They might also discuss the rapid shift in demand, from commercial use channels to personal use channels for the distribution of their products, and their ability to adapt processing and distribution to where the market is providing demand right now. Another factor that we should be cautious of when looking at interim MD&A specifically, and specifically for venture issuers that are using quarterly highlights format, is the necessity of potentially having to update risk factors in those documents where they otherwise ordinarily would not. Interim MD&A is required to update the companies most recent annual MD&A. Quarterly highlights is a format that is available for venture issuers. It';s even more abbreviated. It is just quick summary of highlights of what has occurred in the quarter. The securities regulators have indicated that discussion and analysis can omit things that would simply repeat what is contained in the most recent annual MD&A if the same disclosure still applies. Issuers often omit risk factors if they haven';t changed. But under the current circumstances there';s a very good chance that risk factors have changed so we recommend examining that and include an updated risk factors where appropriate. Martin, I';m going to turn this over to you to discuss material change reporting.
Martin: Thanks, Warren. I think another matter issuers have been grappling with is how and when they might have to disclose a material change in their business as a result of COVID-19. As you know, issuers have an obligation to immediately issue and file a press release and then to file a material change report within 10 days if there';s a material change in an issuers business operations or capital, that would be reasonably be expected to have a significant effect on the market price or value of the issuance of securities. However, it';s important for everybody to know that the material change reporting obligations are tied to a specific change in your company';s business operations or capital. I think you have to look at the impact COVID-19, or any related regulatory or legal policies or changes, are having on your company. This being said, the decision to file a material change report is contextual, based on your circumstances and the likely market impact on the value or price of your securities. For example, the CSA has suggested in their guidance that if you';re affected equally as others in the same industry then a material change report might not be required. Ultimately, whether or not to issue a press release and file a material change report, is a judgment call for company management. The environment is evolving rapidly and what is not a material change report yesterday may quickly become one today. Some of the situations where issuers have issued a material change report in response to the pandemic included suspension or resumption of material, industrial or resource extraction operations, material sales decreases, cancellations of dividends or other distributions, lay-offs, retail closures and supply chain disruptions. Given the rapidly changing environment, and the significant impact COVID-19 is having across the economy, it';s tough for issuers to stay on top of things. Some of things we think issuers might like to do in order to try and monitor these developments and ensure they comply to securities law obligations are: to have more frequent disclosure committee meetings; ensure disclosure committee members are available on short notice and ensure that they advise management of extended periods of unavailability; consider, as new information becomes available, whether that information, together with previous information and changes, add up to a material change in respect of your business; and regularly consult with counsel in connection with your disclosure obligations. Back over to you, Warren, to discuss forward looking statements.
Warren: Okay. As we know, Canadian public companies are encouraged to provide forward looking information and forward looking statements, if they';re reasonably to do so. However, there are cautions that all forward looking information, all future oriented financial information and financial outlooks must be based on assumptions that are reasonable. Whenever disclosure is made the issurer must identify the information that it has disclosed that is forward looking, state management';s assumption that have gone into developing that forward looking information, include the cautionary language that actual results may differ and then describe material risk factors that could cause actual results to materially differ. So in light of COVID-19, and the government response and the social response and your company';s response, a lot of these things represent changes that could have impacted the facts and assumptions underlying previously disclosed forward looking information. So what we';re recommending issuers do is look at their forward looking statements. Is there still a reasonable basis for previously disclosed forward looking information? Are assumptions still reasonable? Have the risks that could cause results to differ been correctly identified and disclosed? If not, it may be worthwhile to withdraw those forward looking statements, or to update them, in order to mitigate the risk of secondary market liability for that forward looking information that has ceased to be reasonable due to foreseeable but undisclosed material risks. Specifically in the context of management';s discussion and analysis, the securities administrators expect a discussion of reasons why actual results, for future periods, may differ materially from previously disclosed material forward looking information, and to discuss material differences between actual results achieved in the current period and previously disclosed forward looking information and financial forecasts. If you have had to withdraw, or qualify previously disclosed forward looking information, that should be referred to in the management discussion and analysis. When making these disclosures issuers are expected to discuss the events and circumstances that led to the decision to withdraw or change guidance, including a discussion of the underlying assumptions that are no longer valid, and what investors should expect going forward. That is it for our discussion of continuous disclosure. Back to you, Cyndi.
Cyndi: Great. Thanks, Warren and Martin. It';s a lot for issuers to think about and certainly not easy topics to deal with. Not only are public companies having to grapple with the unprecedented disclosure challenges they face, many are also facing challenges meeting certain other obligations under Canadian Securities laws, in light of the pandemic. Such as the filing of financial statements, technical reports and MD&A. The Canadian Securities administrators and stock exchanges have recognized these challenges and have provided relief for some of the standard filing requirements. I';m going to now turn things over to Martin and Michael who will discuss what relief has been granted, what are public issuers continued obligations, how issuers can rely on the relief available to them and also the potential implications of reliance that issuers should be aware of. So, Martin, why don';t you start with a summary of the relief that is available.
Martin: Thanks, Cyndi. In response to the challenges relating to COVID and the difficulties that it might provide issuers trying to file a continuous disclosure documents, the CSA has essentially issued blanket orders that provide for an additional 45 day period to file continuous disclosure documents. That would otherwise have to be filed by August 31. These extensions apply to most documents required to be filed under National Instrument 51-102 including financial statements, associated MD&A and annual information forms. Similar extensions are also provided for certain mining or oil and gas technical reports. However, it';s important to remember that the relief does not extend to an issuers obligation to make timely disclosure of material changes or to file material change reports within 10 days. To the extent there';s a material change in the business there';s no extension available. The issurer has to disclose the information promptly. It';s also important to note that the relief is not automatically extended. Issuers have to satisfy certain conditions in order to extend their filing deadlines. Issuers are essentially subject to three obligations. First, they must issue a press release in advance of filing deadlines, which describes the applicable requirements for which they';re relying on the extension, states that the issuers imposed and insider trading blackout policyments management or other insiders that it is consistent with certain CSA policies, states the estimated date by which the delayed disclosure documents are expected to be filed and made available and provide an update on any material business developments since the date of the issuers last financial statements that were filed, or provide confirmation that there were no such developments. Second, issuers must file follow up press releases not later than every 30 days after the date of filing was required, which provides an update on any material business development since the last news release, or confirms the absence of those developments. Finally, issuers may not file a prospectus until it';s filed all the documents for which it is relying on the exemption. I think finally, issuers should be aware that the relief was granted under two distinct sets of blanket orders. A set of orders dated March 23, which provided for a 45 day extension for documents to be filed on or before June 1, and a second set of blanket orders dated May 20, which provided exemption for documents to be filed between June 2 and August 31. These orders are distinct. This has a couple of implications. First, issuers have to comply with the conditions set out in the order dated May 20 if they want to extend the filing deadline for any documents to be filed between June 2 and August 31. The issurer cannot merely rely on the press release that may have been issued in connection with the first order issued on March 23. A new press release must be filed. Second, the blanket orders do not extend the filing period for documents required to be filed by June 1. The extension period for those documents remains 45 days. An issurer cannot rely on the more recent blanket order to extend the filing deadline for those documents for 90 days. Those documents will remain subject to a 45 day extension period, as will the documents to be filed between June 2 and August 31. I guess over to you, Michael, to discuss the frequently asked questions and guidance that the CSA has provided with respect to the implementation of these two blanket orders.
Michael: Thank you, Martin. The CSA published staff notice 51-360, Frequently Asked Questions Regarding the Filing Extension Relief. This notice was last updated on May 13. The FAQ';s include several interesting questions and we';ll look at a few them, but I think the key point that we would like you to remember is, that these FAQ';s are being added to and updated by staff of the CSA. We encourage issuers to check back to notice 51-360 from time to time for new Q&A';s that they may find useful. Let';s start by looking at how to calculate an extension period. We start counting the extension period the day following a reporting deadline. By way of example, if the deadline is August 29, 2020, counting of the first day of the 45 day period extension starting on August 30. The extension period would then run until October 13, 2020. That';s 45 days. The next question that the staff notice looked at where it was with respect to a normal course issurer bids. So similar to the prospectus example that Martin mentioned, an issurer that is purchasing or planning on purchasing it';s own securities, pursuant to normal course issurer bid exemptions, will not be able to do so if they';re relying on the filing extension exemption. In fact, the bid must be suspended until he issurer is up to date in its disclosures. There is an exception in the case of a pre-existing automatic securities purchase plan, of course. The rational for this policy, this stance of the CSA, is that there';s a heightened risk that the issurer, who has not yet fully disclosed its information and possibly its management, may have material information that it can act upon. The next question that the guidance deals with is in the case of management cease trade orders, MCTO';s. An issurer subject to an MCTO will not be able to rely on the relief to extend time requirements that apply under the MCTO and, if the issurer anticipates not being able to meet those time requirements of the management cease trade order, it should in turn contact the securities regulatory authority that issued the cease trade as quickly as possible. Two other cases to which the filing extension relief does not apply are reports of exempted distribution under National Instrument 45-106, as well as insider reports for transactions insiders would make on SEDAR. So now we';ll turn back to Martin who will briefly discuss with you the impact of relying on the filing extension relief.
Martin: Thanks, Michael. I think it';s important, ultimately as a practical matter, for issuers to remember that there';s some significant implications and downside associated with relying on the relief and that this might persuade them to avoid relying on the relief unless it';s absolutely necessary. For example, while relying on the relief an issuers access to public financing by way of prospectus is essentially cut off. Normal course issurer bids likely have to be suspended. Management and insiders must be subject to a trading blackout and issuers need to consider if their existing disclosure processes will permit them to monitor for and to disclose material business developments as they arise. On this last point I think it';s important to keep in mind that a material business development is probably not the same as a material change. A material change is assessed based on market impact on the price or value of an issuers securities but in its guidance the CSA has suggested that the occurrence of a material business development should be assessed using a reasonable investment test. These two tests probably give you the same results and is probably a fair bit of convergence in most cases but not necessarily. The CSA guidance seems to suggest that a material business development might need to surpass a lower threshold to be material as compared to a material change. Therefore, issuers need to bear in mind that while relying on the exemption they could be subject to enhanced disclosure of material developments in relation to their business, which impose a greater burden than the traditional material change reporting might. Michael, back over to you.
Michael: Thanks, Martin. Martin has raised some important considerations and let';s see to what extent reporting issuers in Canada are relying on the relief. The data is presented in three slides and they should be up for participants to see. I';m not sure if we';re able to see them but in our data, and we';d like to thank Adam Sherman for his research and skill in putting those together, okay great. So we see the slides are up. First slide in our review we looked essentially at one of the main conditions of the filing extension relief which is the publication of a news release. This was mentioned by Martin earlier. Our statistics are essentially based on issuers that meet that requirement. If an issurer intended to rely on the relief but failed to publish a press release it will not be captured in our stats. But to May 25, 2020, we found that a total of 222 issuers filed published press releases of their intention to rely on the relief, and this in and of itself is actually a substantial increase in the number of issuers relying on the relief. Last we were aware around mid-April, the number of issuers relying on the relief were in the high 80';s. In recent weeks there has been a substantial increase. In our first slide we show the proportion of issuers relying on the relief by their listing exchange. Over half of the issuers are listed on the TSXV. 18% are listed on the Canadian Securities Exchange and 28% are listed on the TSX. In our next slide we examine how the issuers are relying on the relief. It';s actually which documents they plan to file at a later date or an extended filing date. A vast majority of those issuers relying on relief apply the relief to their quarterly financial statements and/or their MD&A. That';s just about 86% of issuers. While only 9% of issuers intend to rely on the extension for the filing of their AIF. We believe that this makes complete sense for two reasons. Number one, the date of the AIF does not precede the date of the auditor';s report for the annual financial information and two, in the case of venture issuers, AIF';s are not subject to a filing deadline. In our last graph that we';ll put up on our slide, we looked at issuers relying on the relief by industry, and find that around 42%, a large number of issuers are in the mining sector, who are relying on relief. This also makes sense given the large proportion of issuers generally in Canada that are in the mining sector and following second are issuers who are largely in other industries. It will be interesting to see how these statistics change over time and we';ll turn it now back to Cyndi who will take us to our last topic of today';s webinar.
Cyndi: Great. Thanks, Martin and Michael. I think the key takeaways there for participants watching is that there is relief that';s available but that there are requirements you need to comply with in order to avail yourself of that relief. Ensure that you';re seeking proper counsel on that. So social distancing protocols and limitations set on the size of group gatherings, this proxy season many Canadian public companies are faced with the question of how to legally hold their shareholder meetings, in a manner that minimizes health risk to the participants. Traditionally, shareholder meetings have been held in a physical location with shareholders voting either in person or by proxy, but COVID-19 is leading to public companies having to consider novel ways to hold their shareholder meetings. Our final topic today will be on the holding of virtual AGMs. In this regard there are corporate security laws and stock exchange policies that must adhered to. As we have learned through this process there are challenges and practical considerations to this format. I';m going to turn it over to Kathleen who will lead the discussion on this topic.
Kathleen: Thanks, Cyndi. So we';re going to break this topic down to three areas. First of all, I';m going to speak briefly about how companies were approaching this issue and some of the decisions that they';ve made to date, including relating to postponements. But basically we are seeing companies move to entirely virtual meetings this year and we';ll talk about that. We';re going to talk about the corporate law developments relating to holding virtual meetings, in each of our jurisdictions, and then we';re going to go through some logistical aspects of holding a virtual meeting.
Obviously a significant number of issuers have December 31 ... May and June, right now, is really the busiest months of the year for AGMs. The more senior listed issuers have earlier filing deadlines. They had already gotten the ball rolling for their meetings in early May when the pandemic hit back in early March. On March 20 the Canadian Securities regulators issued some initial guidance on virtual meetings. It was really focused on AGMs. Just the regular plain vanilla meetings with election of directors, appointment of auditors, maybe things like amendments to equity, incentive plans, things like that. But their guidance for reporting issuers that were going to be having proxy contests, or getting approvals for an M&A transaction, or 61-101 transactions, in those cases the guidance was to contact the principal regulator and have a discussion with them about what needed to be done. For those who had already put out their circulars, and that was probably a fairly limited number, the only way to really address matters was either to postpone the meeting, which they could do generally speaking in the ordinary course, usually until the end of June, or otherwise they were going to have to communicate the limitations or the adaptations that they were going to use for the meeting, in both cases by way of press release. So what they had to was they had to encourage people to vote by proxy and indicate that attendance in person would be limited to comply with applicable law for gatherings. Some issuers are still doing this. I think they';re hopeful that they will have in person meetings, and maybe in some jurisdictions in Canada that will be coming soon, but in others certainly not. In those early days some people had to resort to tactics that distributed people amongst various meeting rooms so that you didn';t go over the number of people who could congregate together. Those meeting rooms were then connected by phone. We even saw one case in the case of a private company client where sort of people were distributed amongst cars in a parking lot. Again connected by phone. People had to be a little bit ingenious and innovative to deal with these situations in the early days. For those that decided to postpone, in most jurisdictions things haven';t really improved enough, and at this point there';s a good chance they won';t be able to have an in person meeting before the end of June. It might be quite some time before companies can reliably host a meeting in person without at least providing telephonic or electronic access. When you do both of them together that';s called a hybrid meeting. So we can expect that issuers that have March 31 year ends to also be considering postponements and also virtual meetings.
Just on the issue of postponing a meeting, obviously Canadian Securities regulators they don';t establish meeting requirements. Those requirements are established under corporate law. They may be in the bylaws of the company. So you have to look to both corporate law and articles and bylaws in making these kinds of decisions. While there are variances from jurisdiction to jurisdiction, generally speaking, annual meetings have to be held within 15 months of the last meeting, or within 6 months of the year end. The corporate law relief varies from jurisdiction to jurisdiction as well. Just as an example, under Ontario corporate law, the Ontario Business Corporations Act, if you had a deadline to have your meeting, say June 30, which was within the period of the emergency, we still have a declared emergency here in Ontario, the deadline becomes the 90th day after the emergency is terminated, or if the deadline falls within 30 days after that emergency is terminated then the deadline becomes the 120th day after the emergency is terminated. So there';s not a clear date by which you have to hold your meeting. Right now it';s a moving target as long as this emergency goes on. But in contrast, under the CBCA for example, the Canada Business Corporations Act, if you want to delay your meeting past the deadline, the 6 month deadline, you actually need court approval for that. You really do have to look at your corporate law requirements. You';ve also got the stock exchanges. They have tried to be flexible in this. Right now, both the TSX and TSXV have basically said you can hold your meeting anytime in 2020. Effectively they';re pushing out the deadline to December 31, 2020 for companies that had a deadline of June 30th. A postponement of 6 months is significant and whether that';s going to be acceptable to an issurer or its shareholders is really going to depend on a number of factors that you have to consider. An issurer might have a plain vanilla meeting. May not have many shareholders attend in person so they may be keen to get it over and done with. Or they might want to postpone. An issurer that has special business, that needs to be taken care of sooner rather than later, they may need to go to the virtual route. We can talk about that.
When we started looking at this situation, and we looked at the corporate laws across our jurisdictions in Canada; BC, Alberta, Ontario and Quebec. The Ontario Act had the least resistance to hosting a virtual AGM. Unless your articles or bylaws provide otherwise, in Ontario under the OBCA, you can hold a meeting by telephone or electronic means. Somebody who votes at that meeting, has established communication link with that meeting, is deemed to be present at the meeting. Now there might be some issuers have prohibitions in their articles or bylaws so the way we were originally considering handling this was to amend bylaws and then go get those amendments confirmed by the shareholders at the virtual meeting. But we didn';t need to do that. Relief was provided by the Ontario government. First, by an emergency order and then more recently by legislative amendment. Notwithstanding the provisions in articles or bylaws issuers are temporarily, while this emergency exists, they can hold their meetings entirely virtually, in Ontario. Just as a side note, it';s kind of interesting, if you had called the meeting virtually on the basis of this relief and then the temporary suspension period ended, query whether you can still hold that meeting virtually. We could actually see people having to go through the same thing, but the other way around, issue a press release to say we';ve made a change. We';re actually going to have this meeting in person as well and designating a particular location. But we';ll have to see. Martin, the CBCA and the Alberta Act are a bit more problematic. Can you address those statutes?
Martin: Yes, thanks, Kathleen. I think overall the Canada Business Corporation Act and the Alberta Business Corporations Act, we are more restrictive than the Ontario Act, where virtual meetings are concerned. Under the Ontario and Federal Business Corporations Act, a company may only hold a virtual meeting, entirely by electronic means, it is expressly permitted by the company';s bylaws. Unfortunately, unlike in Ontario, neither the Alberta government nor the CBCA director has issued orders to permit a corporation whose bylaws do not authorize a meeting by electronic means, to hold a virtual meeting. However, there has been some guidance provided by the CBCA director suggesting that a corporations board of directors might circumvent this issue by amending its bylaws to authorize a virtual meeting with a change effective until the next meeting of shareholders where it can be confirmed or rejected. The Alberta government has taken a bit of a different approach and has issued an order under the Public Health Act that suspends the obligation of Alberta companies to hold in person meetings. Whether there are few shortcomings to the Alberta order, and among other things, it does not authorize an Alberta company to hold a virtual meeting where the corporations bylaws lack appropriate authorizing language. Consequently, Alberta companies without bylaws that authorize virtual meetings, so you can have the option of postponing an in person meeting to a later date, or perhaps amending it';s bylaws in a manner contemplated by the CBCA director, and having those amendments confirmed subsequently at the virtual meeting.
Kathleen: Thanks, Martin. Cyndi, I think the situation is even more complicated in BC?
Cyndi: Yeah, so BC is unique and British Columbia companies are actually required to set a physical location for their shareholder meetings. But in the BC Business Corporations Act there';s a provision that indicates, unless a company';s memorandum or articles provide otherwise, a shareholder or proxy holder that';s entitled to participate in a shareholders meeting may do so by telephone or other communication medium. If all shareholders or proxy holders participating in that meeting, whether by telephone or other communication, or in person, are able to communicate with each other and, if one or more shareholders or proxy holders of a BC company participates in a meeting in this manner, then each shareholder or proxy holder is deemed to be present at the meeting and the meeting is deemed to be held at the location specified in the notice of the meeting. So, until very recently what we were telling our BC clients is that they should set a physical location, whether it';s at their office or their lawyer';s office, have one person attend but then in the proxy information circular to encourage, as well as on your website, encourage your shareholders to actually not attend the meeting, to phone in or to host a virtual meeting, provided that one person was actually in the physical location. However, on April 21 BC also had an emergency health order issued which provides that BC corporations with temporary relief from location requirement for shareholder meetings, and also deems persons participating in accordance with the order to be present in person, and this assists BC companies with their quorum requirements.
Kathleen: Right. Thanks, Cyndi. Finally, Quebec. Michael, the lockdown measures in Montreal have been amongst the most stringent in Canada. So how does the corporate law deal with them there?
Michael: Kathleen, I';m pleased to say that Quebec appears well positioned on the front of virtual meetings. The Business Corporations Act is relatively new, enacted in 2009, and the law allows people entitled to attend an AGM, to participate by means of any equipment that enables all participants at a meeting to communicate directly with one another. In addition, where articles or bylaws are more restrictive or the entity is established under a different legislation than the Business Corporations Act, the Minister of Justice on April 27 issued an order that allows participants at a meeting to participate virtually as well.
Kathleen: Great. Thanks, Michael. Before we discuss logistical matters I just want to highlight where we';re at in the adoption of virtual meetings. While they';re becoming more and more prevalent it is still early days. Everyone';s learning as they go. For most issuers this is the first time they';ve done them. If we can get the slides back up I';d just like to show you, based on our searches, as of May 24, 2020 there were 121 issuers that had either announced or had held some sort of virtual meeting. Of those, 73% of them were on the TSX. 23% on the TSXV and 4% on the CSE. Now, the first challenge with hosting a virtual meeting is deciding on a general platform to do so. In the past these were quite limited. Sorry, you just see the slide now with the 73% on the TSX, 23% on the TSXV and the 4% on the CSE. If we go to the next slide, we';ve had virtual meetings in the past. They were quite limited. Examples are Canada Goose. It';s had its meeting entirely virtually and the TMX Group has held what we call a hybrid meeting so both virtual electronically but also in person. For those types of meetings there was a professional provider that those companies used and, of course, that provider had a first mover advantage when this all happened, and that company';s name is Lumi. If we look at the same group of issuers in this slide, 58% of the companies that have had virtual meetings so far this year, 58% of them have used Lumi, 39% have used some other methodology and 3% are still in the process of determining. Of the percentage who';ve used Lumi, that';s 87% who are TSX listed issuers and 13% which is the TSXV. Why is this? Really, it';s likely cost. The Lumi platform isn';t cheap, and in these times I think issuers are having to sort of balance the process for holding the meeting, and the ease of that with cash conservation as well. So what are the alternatives? It depends on the circumstances of the company. We';ve seen situations where you can run a meeting by simple telephone conference call. Obviously it';s difficult to manage if you have more attendees. Others use some kind of a webcast. If a company does quarterly investor calls, and they have a webcast mechanism that they';re using, this might be a reasonable choice for them. Other issuers have used Zoom and you can get quite elaborate with Zoom using its polling features. There are a few other providers. Some have been developed for other meeting purposes. Like for condos and things like that, but they';re evolving their services as we speak, to service these types of meetings.
Aside from the cost, when you';re deciding on the platform that you';re going to use, you';ve got to consider the other logistical matters. Even if you can hold the virtual meeting it doesn';t relieve you from complying with the requirements to afford shareholders the ability to be heard at a meeting and to vote at a meeting. So some of the questions that you might ask are how many shareholders normally show up for a meeting? Are we looking at changes this year in the board and the auditors? Is there special business? You';ve got to look at that context in making this decision. If you';re looking at the various platforms you need to think about whether they accommodate the expectations of your shareholders. Are they flexible enough to accommodate wrinkles that you might experience at the meeting? It';s pretty stress if things go wrong. If not, then you really need to be prepared to adjourn your meeting. Maybe even within the meeting or to postpone the meeting. Again, you run into these corporate law issues that we';ve mentioned. You might actually have to change your record date if you have to push your meeting date out too far. The concept of hosting the virtual meeting is perhaps a bit different than hosting one in person, and the professional systems like Lumi, approach meetings a bit differently. So you have to dig into the mechanics of your system to see what that platform does differently than what you might expect to do and what that might mean for your particular meeting. I';ll give you an example. Lumi';s standard terms and conditions provide that when a registered shareholder logs on with their control number, from a proxy, and they vote in the online poll, they';re previously deposited proxies are automatically revoked. This isn';t the way it normally works. You can only revoke your proxy before the meeting, up until the commencement of the meeting. So, typically what happens is if you';re a registered shareholder and you';ve already voted, what you really should be doing is signing on as a guest with Lumi and coming into the meeting but then you can';t really ask questions either. You don';t vote on the online polls in those circumstances. But you can work with Lumi to change the terms and conditions and align different processes to be more like a regular meeting. Once you have the sense of the platform you';ve got to work with your transfer agent. I think it';s helpful to take a look at the typical script that you have and see whether they';re going to be any issues that might arise. I';ll talk a bit more about that in a minute. The next question is how are people going to attend this virtual meeting? If you think about a regular AGM, when people come in person they register at a desk with the transfer agent, they might be given a ballot to take in to vote on, some but maybe not all guests are allowed in. These are other considerations. For Lumi, and other meetings that we';ve done using Zoom, we';ve created an advance registration process which helps with shareholder verification. Whether the person is supposed to be afforded the opportunity to be heard and vote at the meeting. It';s something that might be managed by Lumi and the transfer agent, but if your doing something and using a simpler model, then that';s something that the company might have to manage. By way of example, we';ve seen situations where the company sets up a registration process on its website.
Assuming the time permits, and the logistics can be addressed before the meeting materials are finalized, you want to get those details into the circular. You need to coordinate with the transfer agent the whole proxy voting infrastructure, but if an issue arises subsequent to doing the mailing of your meeting materials, then your added protection is to issue a press release to clarify things. It just that presents a bit of an additional risk in calling the meeting. Once everything';s been settled, and everything';s in the mail, then that';s when you can turn to finalize the script. You';ve got to think about things. Is there really going to be a real interaction with shareholders or is it just slides coming up with a presentation? Are you going to have votes by way of a show of hands on certain types of motions? Maybe with a few attendees only, say by telephone, you could call out names and ask for votes or ask people to indicate if they are against a matter. If you';ve got actual motions where there are going to be ballots, normally you would sign up the ballots during the meeting, but maybe this is something that can be done prior to the meeting and maybe in connection with the registration process. All of this you';re going to have to coordinate with the transfer agent. So that takes me to the last point that I want to make which is that you do have to sort this all out with a transfer agent. How are they going to report on attendance at the meeting to show quorum? How are they going to count the votes and report on them? The large transfer agents are comfortable with Lumi, even that is early days, but if you want to do something different you';re going to have to get them comfortable about the process. A particular concern is how to validate the shareholders who are voting in a meeting and that their votes are being counted. Your best bet is for all the votes to come through on proxies so there isn';t an issue. But if you are voting at the meeting, and obviously have to provide that opportunity, then that';s really the trickiest part, in my view, to resolve. So, Cyndi, that';s sort of a summary of what I hope people want to know about hosting virtual AGMs. Back to you.
Cyndi: Okay. Great. We';ve got about 2 minutes left and so we';ve been getting some questions in. We';re probably not going to be able to get to all of them but I';ll ask a few of the panelists and then if we don';t get to your question we';ll follow up with an email response. Just Kathleen, because we were talking about shareholders meetings, I';d though we may as well stay on that topic right now. So can you talk more about how you direct shareholders into these meetings and can be sure that they';re supposed to attend and how would it work if you were using Zoom, for example.
Kathleen: Sure. It really is all in the registration process. Lumi had figured this out previously. Basically registered shareholders use their control numbers on their form of proxy. That';s something the transfer agent has access to so they can check that. Proxy holders normally have to go through dealing with the transfer agent. They have to ask for a username and then that';s what helps them login to the Lumi system. So basically you can adapt that system for use whether ... , for example for Zoom, working with your transfer agent, making sure that you';re dealing with both the control numbers and the proxy holders. When you';re working with Zoom, obviously you want to create some security around all of it. We';ve seen a situation where what you do is publish their regular website address and phone number but people have to register in advance to actually get the link and the passcode and that';s what sort of keeps it a more secure meeting. That takes you through a registration process and a verification process which helps you figure out whether people can be voting or not. Once you';re actually in the zoom meeting you can see people just as you can now. They may not bother to show their video but you know that they';re there and that';s how you can sort of call people out to either mute, to hear their questions and to call for votes. There';s also the poll process you can use on Zoom.
Cyndi: Great. Okay. Thanks. I';m sorry everyone. We';re already about 1 minute over. We are going to end today';s webinar. We';ll try and get back and address the questions that we weren';t able to address, offline, and also as we said, please feel free to reach out to any of the speakers. The bios, email addresses will be obviously on our website. So thank you to everyone for attending today';s webinar. We hope you found it inciteful and please stay safe and check out our next series of webinars that are coming up. Thank you.