Recognizing the inherent difficulties in hosting in-person annual general meetings in light of the COVID-19 outbreak, Industry Canada has published guidance endorsing virtual shareholder meetings for Canadian federally incorporated businesses.
- The guidance confirms that virtual-only shareholder meetings are generally permitted under the Canada Business Corporations Act (CBCA), subject to an issuer’s by-laws and provided that the meeting allows for shareholders to communicate with each other through the digital platform.
- CBCA incorporated issuers looking to delay an annual general meeting still require court approval to do so.
Virtual Meetings not Prohibited under the CBCA
The CBCA Director has confirmed that CBCA corporations are able to hold virtual shareholder meetings provided that it is not prohibited by the corporation’s by-laws. Where a corporation’s by-laws explicitly allow for virtual meetings, shareholders can attend the meeting exclusively through a digital channel that allows participants to speak with each other during the meeting. Where by-laws do not permit virtual meetings or are silent, a hybrid meeting where some participants attend in-person (and other attend through a digital channel that allows participants to speak with each other during the meeting) will be appropriate.
Issuers are reminded that participants can vote digitally at a shareholder meeting so long as it is (i) not prohibited by the corporation’s by-laws, and (ii) the meeting complies with regulations. More specifically, the digital platform must allow for the corporation to gather votes in a way that allows them to be verified, tallied and presented while maintaining the anonymity of the votes.
Where a corporation’s by-laws do not allow for a virtual meeting or are silent on whether the corporation can hold a virtual meeting, the CBCA Director has confirmed that the board of directors can amend the by-laws effective until the next shareholder meeting where the amendment can be ratified or rejected by shareholders.
AGM Delay requires Court Approval
In order to delay an annual general meeting, the CBCA Director has confirmed that CBCA incorporated businesses will need court approval.
As a reminder, federally incorporated businesses are required to hold annual general meetings of shareholders every year and must call a shareholder meeting within 15 months of the previous annual general meeting and no more than six months after the corporation’s last financial year end.
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