Ontario government issues emergency order providing flexibility with respect to shareholder and director meetings
On March 31, 2020, the Ontario Government (“Ontario”) issued an order under section 7.1(2) of the Emergency Management and Civil Protection Act suspending certain provisions of the Business Corporations Act (the “OBCA”) and the Corporations Act (the “Corporations Act”) and substituting therein temporary provisions. The temporary provisions permit virtual or electronic shareholder and director meetings despite any provision in a corporation’s bylaws or other constating documents. As well, the temporary provisions extend certain deadlines for shareholder and director meetings. The changes apply retroactively from March 17, 2020, the date Ontario declared a state of emergency.
The temporary provisions described in this post follow similar announcements by the Canadian Securities Administrators and the Toronto Stock Exchange that endorse or encourage virtual or hybrid shareholder meetings. However, in those announcements, corporations and reporting issuers were reminded to check their bylaws and constating documents to ensure these documents did not contain provisions that preclude virtual or hybrid meetings. Under the temporary provisions, corporations incorporated under the OBCA and the Corporations Act that were otherwise constrained by their constating documents can now comfortably hold virtual or hybrid shareholder meetings as well as directors meetings. What follows is a more detailed summary of the various temporary provisions.
Temporary provisions in the OBCA
Section 94 – Virtual and hybrid shareholder meetings and an extension of time for holding such meetings
Section 94(1)(a) in the OBCA requires annual general meetings of shareholders to be held within 18 months of a corporation’s incorporation and every 15 months following the last meeting. Under the temporary provision replacing section 94, an annual general meeting that is required to be held on a date during the state of emergency is instead required to be held no later than the 90th day following the termination of the state of emergency. Additionally, a meeting required to be held on a date that is within the 30-day period after the termination of the state of emergency is instead required to be held no later than 120 days after the termination of the state of emergency.
Despite any provision in a corporation’s bylaws or constating documents, a shareholder meeting may be held virtually or electronically and a shareholder participating by such means is deemed to be present at the meeting.
Section 126(13) – Virtual or electronic directors meetings
Section 126(13) is replaced such that director meetings or a meeting of a committee of directors can be held virtually or electronically despite an provision in a corporation’s bylaws or constating documents.
Temporary provisions in the Corporations Act
Provisions that mirror the temporary provisions inserted into the OBCA have also been enacted in the Corporations Act. Section 125.1 is suspended such that shareholders or members are able to participate virtually or electronically in a shareholder meeting despite any provisions in the corporation’s bylaws or constating documents. Similarly, section 283(3.1) has been replaced so that a meeting of directors or a committee of directors can be held virtually or electronically despite any provision in the corporation’s bylaws or constating documents. Directors participating in such a meeting are deemed to be present at the meeting.
With respect to extensions for when meetings are to be held, section 293 is suspended and the extensions described above regarding shareholder meetings in section 94 of the OBCA are enacted for corporations to which the Corporations Act applies. Additionally, a meeting of shareholders for the purposes of electing directors that is required to be held in 2020 is no longer required to be held within the first three months of the year (as traditionally required by section 159(1)). Instead, this meeting shall be held no later than the 90th day following the termination of the state of emergency.
For any questions or concerns relating to these temporary provisions, please contact your McCarthy Tétrault relationship partner or Andrew Parker, Patrick Boucher, or Wendi Locke