CSA provides guidance re Annual General Meetings during COVID-19 Outbreak
On March 20, 2020, the Canadian Securities Administrators (the “CSA”) announced by press release its guidance with respect to annual general meetings (“AGM”) during COVID-19 specifically relating to changes to an AGM’s date, time or location and holding virtual or hybrid AGMs.
This guidance is limited to all business transacted at an AGM. For reporting issuers involved in proxy contests, holding special meetings for merger and acquisition transactions or obtaining securityholder approval for transactions under Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions, the issuer should contact its principal regulator to determine the appropriate course of action.
A reporting issuer can change the date, time or location of an AGM after it has filed and sent out proxy-related materials without additional soliciting materials or updating its proxy-related materials if the reporting issuer:
- issues a news release announcing the change in 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 (including intermediaries, transfer agents and proxy service providers) of this change.
These steps should be taken promptly and sufficiently in advance of the AGM. Where the reporting issuer has not yet filed its proxy-related materials, it should consider including disclosure about possible changes to time, date and place as a result of COVID-19.
In addition to the above, the issuer should also review applicable corporate laws and its articles and by-laws or other constating documents insofar as these relate to AGMs to ensure compliance.
The CSA also provided guidance regarding virtual or hybrid AGMs. A virtual AGM is a meeting conducted through the internet or other electronic means. A hybrid AGM is an in-person meeting that also permits securityholders to participate by the internet or other electronic means.
The CSA expects that where a reporting issuer wishes to hold a virtual or hybrid AGM, the issuer will notify its securityholders and its proxy voting infrastructure and other market participants of its intent to do. The issuer must also provide logistical details of the virtual or hybrid AGM. If a reporting issuer has not sent out its proxy-related materials for an AGM, the issuer should include disclosure in such materials about its intention to hold a virtual or hybrid AGM. The issuer should ensure that the disclosure conforms to Glass Lewis 2020 Policy Guidelines on virtual AGMs. If the issuer has already sent out its proxy-related materials but thereafter decides to hold a virtual or hybrid AGM, it can rely on the steps outlined above and does not need to file additional soliciting materials or update its proxy-related materials reflecting this decision. For further information on the specificities of virtual and hybrid AGMs, we refer you to our recent blog post on the matter.
Lastly, the CSA addressed section 2.15 of National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer, which requires notices of adjournment or changes to an AGM to be sent concurrently to both registered holders and beneficial owners of securities. The CSA’s position is that no exemptive relief is required from section 2.15 so long as a reporting issuer treats both registered holders and beneficial owners equally and both groups receive the same information.
The coincidence of the outbreak of COVID-19 with the 2020 proxy season can present novel complications for reporting issuers. For further information regarding how to hold virtual or hybrid AGMs, please contact your McCarthy Tétrault relationship partner or Andrew Parker, Sonia Struthers or Wendi Locke.