March 18, 2020
Partner Rima Ramchandani has told the Globe and Mail that she expects companies will move to virtual-only AGMs as companies deal with social distancing in a bid to curb the spread of COVID-19.
The Globe piece discusses the technology and legal requirements for companies to move toward virtual AGMs, with April and May speak season for these meetings.
“It will be a rare issuer that decides to proceed with the status quo this proxy season,” Rima said.
The article continues, saying that moving to virtual AGMs has its own challenges. An excerpt from the article is below
Companies need the legal authority to conduct a virtual meeting, and ensuring that can depend on both the business’s own bylaws as well as the relevant corporate legislation.
Ontario’s law authorizes virtual meetings, but other jurisdictions are not as flexible. There are also requirements related to the timing of filings and the means of notifying shareholders, and in some cases, a court order may be required to facilitate a virtual meeting.
However Rima told the publication that announcements regarding court closures at the moment could “make it impossible for companies to get orders on a timely basis”.
“Issuers will start to balance the legal risk of being technically offside the bylaws,” Rima said.
“If it is not practical to obtain a court order because the courts are closed, companies might have to drive on and get comfortable with the risk.”
Rima and a team of Torys lawyers have written a piece on virtual AGMs in light of COVID-19. You can learn more about considerations for your organization by reading “COVID-19 and AGM virtual meeting planning”.
At Torys, we understand the how the pandemic is presenting challenging and unique circumstances for businesses. We are keeping close watch on developments as they unfold, and have established a resource centre on our website, COVID-19 guidance for organizations, where you can find our latest updates for businesses navigating COVID-19-related issues.