Canadian Securities Administrators provide guidance on AGMs during the COVID-19 outbreak‎

Capital Markets Alert

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In our recent bulletin published on March 19, 2020, we discussed the legal implications and the potential advantages and disadvantages issuers may encounter when considering hosting a virtual or hybrid shareholder meeting as an alternative to an in-person shareholder meeting. In recognition of the increasing concerns regarding COVID-19, and in an effort to add further clarity, on March 20, 2020‎, the Canadian Securities Administrators (“CSA”) issued a press release, titled “Canadian Securities Regulators Provide Guidance on Conducting Annual General Meetings During COVID-19 Outbreak”.

The CSA’s press release was prepared to address all business transacted at annual shareholder meetings (for example, election of directors, appointment of auditors and amendments to equity incentive plans).The release does not address concerns or questions relating to 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. In those situations, the CSA encourages issuers to contact their principal regulator to discuss what steps might be appropriate.

Changing the date, time or location of a meeting

The CSA’s guidance provides clear instruction to those issuers that have already sent and filed their proxy-related materials and that are or have considered changing the date, time or location of their in-person meeting. The CSA guidance states that an issuer does not have to send additional proxy solicitation materials to securityholders or update its proxy-related materials so long as it promptly:

  • issues a news release announcing the change in the date, time or location of the meeting;‎
  • files the news release on SEDAR; and
  • takes all reasonable steps necessary to inform all the parties involved in the proxy voting ‎infrastructure (such as intermediaries, transfer agents, and proxy service providers) of the ‎change.‎

In addition, issuers who have not sent or filed their proxy-related materials should consider including disclosures in its proxy-related materials regarding the possibility of such changes due to COVID-19.

 

Guidance for virtual or hybrid meetings

 

Where an issuer has decided to conduct a virtual or hybrid meeting, the CSA expects the issuer to notify its security holders, the parties involved in the proxy voting infrastructure (transfer agent and technology provider), and other market participants of their plans in a timely manner and to disclose clear directions on the logistical details (see “Practical Guidance” from our previous bulletin). If the issuer has already filed and sent their proxy-related materials, the issuer does not need to send additional materials or update those materials already provided so long as the issuer follows the steps noted above for announcing a change in the date, time or location of the meeting. Similarly, those issuers that have not already filed their proxy-related materials should include full disclosure related to their virtual or hybrid meeting.

 

Guidance for sending notices of adjournment to beneficial owners

 

Finally, the CSA’s guidance addresses questions relating to the application of section 2.15 of National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer. Section 2.15 requires an issuer that sends a notice of adjournment or other change related to an annual shareholder meeting to registered holders of its securities is required to concurrently send the notice to its beneficial owners. The CSA has taken the position that no exemptive relief is required from section 2.15 so long as the issuer’s registered holders and beneficial owners are treated equally and receive the same information.

 

Please note that notwithstanding the guidance set out in the CSA’s release and this bulletin, the conduct of annual shareholder meetings is primarily subject to corporate law and the issuer’s constating documents (by-laws and/or articles). Readers are encourage to review our recent bulletin for further information or to reach out to one of the authors or a member of DLA Piper (Canada) LLP’s Securities and Corporate Finance team.

Please visit our COVID-19 Resource Centre for additional publications and webinars on legal issues related to COVID-19.

This article provides only general information about legal issues and developments, and is not intended to provide specific legal advice. Please see our disclaimer for more details.