Extension of Deadlines for AGM for Reporting Issuers and Possibility of Virtual Meetings
In response to the COVID-19 pandemic, both the Toronto Stock Exchange (“TSX”) and TSX Venture Exchange (“TSX-V”) have released bulletins dated March 23, 2020 providing for the extension of deadlines for holding annual meetings of shareholders. Issuers do NOT need to apply to take advantage of this blanket relief.
Despite these temporary changes, note that issuers must continue to follow provisions in the Canada Business Corporations Act (“CBCA”) and the Ontario Business Corporations Act (“OBCA”) relating to annual meetings, as described below.
TSX Venture Exchange
- Annual Meetings (TSX-V Policy 3.2, Section 4.1): The TSX-V is permitting an issuer that must hold an annual meeting of Shareholders during 2020 to hold its 2020 Annual Meeting on any date in 2020 up to and including December 31, 2020. The TSX-V continues to expect Issuers to comply with applicable legislation regarding the timing of their 2020 Annual Meeting.
- Stock Option Plans (TSX-V Policy 4.4, Section 3.9(b)): Rolling stock option plans usually receive Shareholder approval at the time the plan is to be implemented and yearly, at the issuer’s annual meeting. The TSX-V is permitting an issuer to obtain the 2020 yearly Shareholder approval at its 2020 Annual Meeting, which as indicated above may be held on any date in 2020 up to and including December 31, 2020, subject to compliance with applicable legislation.
- Annual Meeting (TSX Policy, Section 464 and Section 465): The TSX is permitting an issuer that must hold an annual meeting of security holders during 2020 to hold its 2020 Annual Meeting on any date in 2020 up to and including December 31, 2020, regardless of the issuer’s fiscal year end. The TSX continues to expect issuers to comply with applicable legislation regarding the timing of their 2020 Annual Meeting. Issuers are not required to submit a Form 9 in connection with this Annual Meeting
- Security Based Compensation Arrangements (TSX Policy Section 613): An issuer must normally obtain security holder approval every three years for all unallocated options, rights or other entitlements (“Awards”) under a security based compensation arrangement (“Plan”) that does not have a fixed maximum number of securities issuable. Due to the Annual Meeting relief described above, the TSX understands that issues may seek approval later than three years. Therefore, an issuer may continue to grant Awards under the Plan until the earlier of the 2020 Annual Meeting and December 31, 2020. Awards granted during this timeframe may be exercised absent ratification by security holders.
Changing the date, time or location of an annual meeting that has already been sent
The Canadian Securities Administrators announced on March 20, 2020 that in their view a reporting issuer that has decided to change the date, time or location of its in-person AGM due to difficulties arising from COVID-19 and that has already sent and filed its proxy-related materials, can notify securityholders of the change without sending additional soliciting materials or updating their proxy-related materials if the reporting issuer:
- issues a news release, and posts it on SEDAR, announcing the change in date, time or location
- takes all reasonable steps necessary to inform all parties involved in the proxy voting infrastructure (such as intermediaries, transfer agents, and proxy service providers) of the change
Pursuant to the CBCA directors must call an annual shareholders meeting within 18 months after the corporation comes into existence, and subsequently, within 15 months after holding the last preceding annual meeting but not later than six months after the end of the corporation’s preceding financial year.
The CBCA provides that a corporation must obtain an extension order from the court if it cannot call the meeting within the earlier of 15 months after the last preceding annual meeting or 6 months after the end of the corporation’s preceding financial year.
Pursuant to the OBCA directors must call an annual shareholders meeting within 18 months after the corporation comes into existence, and subsequently, within 15 months after holding the last preceding annual meeting.
The OBCA does not require an extension order to call or hold an annual meeting outside the time required for holding an annual meeting.
A CBCA corporation can only hold a virtual meeting of shareholders if the by-laws or articles specifically provide for it.
The OBCA allows corporations to hold a meeting by telephonic or other electronic means unless the corporation’s constating documents provide otherwise.
The annual meeting could be held entirely by a telephonic, electronic or other communication facility without a corresponding in-person meeting (“Virtual”) or a hybrid meeting which is held in-person at a specific location and is also open to online participation (“Hybrid”).
The Canadian Securities Administrators published guidelines on March 20, 2020 providing the following recommendations for virtual meetings:
- an issuer should notify its securityholders, parties involved in proxy voting infrastructure and other market participants of the plans for a virtual meeting in a timely manner
- disclose in the proxy circular clear directions on the logistical details of the virtual or hybrid meeting, including how securityholders can remotely access, participate in and vote at the AGM
Participation by Shareholders
Hybrid and Virtual meetings could be held as follows:
- for a Hybrid meeting, shareholders are given the choice to attend in person or participating remotely through a communications hook-up
- for a Virtual meeting the only option for shareholders is to participate by using the issuer’s chosen communication facility
- a person participating remotely in the meeting is deemed to be present at the meeting and will count toward the quorum requirement
- the communication facility chosen must permit all participants to communicate adequately with each other
- the communication facility could be by way of conference call, video-conference, Skype®, Webex®, Zoom® or other means
- for larger meetings, a service provider is suggested (such as Lumi or Broadridge)
The CBCA allows for voting by means of telephonic, electronic, or other communication facility, unless the by-laws or articles state otherwise.
- The regulations require that the communication facility enables the votes to be gathered in a manner that permits their subsequent verification and permits the tallied votes to be presented to the corporation without it being possible for the corporation to identify how each shareholder or group of shareholders voted. The electronic voting provided by the corporation to shareholders must create the functional equivalent of a secret ballot.
- If the corporation does not provide a compliant form of communication facility (for example, because the meeting consists of an open conference call), any ballots will have to be provided by other means (including manual completion).
- A conference call combined with electronic voting by computer may be compliant if the corporation does not directly gather the tallied votes. Rather, a third-party contractor (including the corporation’s auditor or lawyer) could gather the tallied votes without identifying to the corporation how each shareholder voted.
The OBCA provides that unless the by-laws otherwise provide, voting at a meeting shall be by a show of hands unless a ballot is demanded.
With recent events regarding COVID-19 and government recommendations to avoid large public gatherings and comply with social distancing policies, many corporations may decide that it is best to either postpone their annual meetings or hold virtual only or hybrid meetings.
The foregoing information provides only an overview of the deadline extensions for annual meetings and potential holding of virtual meetings as of the date this information has been provided. Specific legal advice should be obtained. If you have questions in the above regard, please contact the Head of our Business Law Group, Robert P. Kinghan, at (613) 566-2848 or firstname.lastname@example.org.