British Columbia updates its corporate laws to accommodate electronic meetings - JD Supra

mivo.indah.link

Satisfying the requirements of British Columbia’s Business Corporations Act (BCBCA) for holding regular and special meetings of directors and shareholders, while also complying with public health restrictions during the COVID-19 pandemic presented many challenges. BC companies were prohibited from holding in-person meetings in the traditional manner due to gathering restrictions, but still had to comply with the regime for holding meetings set out in the BCBCA and a company’s articles.

In order to address this, the Minister of Public Safety & Solicitor General of British Columbia issued the Electronic Attendance at Corporate Meetings (COVID-19) Order on April 21, 2020. The Order temporarily altered certain meeting requirements under the BCBCA to allow meetings to be held electronically despite restrictions in a BC company’s articles and the requirements of the BCBCA regarding ‘location’ of a meeting. Prior to the Order it was unclear how an electronic meeting hosted on an electronic meeting platform satisfied the location requirements under the BCBCA, and the Order gave clear guidance by temporarily suspending the requirement for a meeting to have a location.

Electronic meetings have become normal course since the Order was enacted. The Finance Statutes Amendment Act (No. 2), 2021, which came into force on May 20, 2021, repeals the Order and makes permanent changes to the BCBCA, providing BC companies with the ability to hold meetings electronically and also providing that there may be circumstances in which electronic meetings will be mandatory.¹ The decision regarding in which circumstances, if any, electronic meetings will be mandatory, will be made at a later date.

BC companies have three options when choosing how to hold meetings: in-person, fully-electronic, or hybrid.

1. In-person meetings

Subject to compliance with public health restrictions on gatherings, BC companies have the option to hold meetings in person. Notice and quorum requirements for in-person meetings have not changed and BC companies holding in-person meetings will need to ensure that they comply with the requirements of the BCBCA and their articles. BC companies that choose to conduct shareholder meetings (AGMs/SGMs) in person are not required to provide for or to facilitate any alternate means of participation for parties who are unable or unwilling to attend in person, but retain the option to do so if desired.² In contrast to the rules for AGMs/SGMs, subject to any contrary provisions in a company’s articles, directors are permitted to attend director meetings by telephone or other communications mediums, even if the meeting is otherwise in person, provided all directors attending the meeting are able to participate in the meeting.³

2. Electronic meetings

An electronic meeting is one in which some or all of the participants participate through telephone or online communication mediums. In this article, electronic meetings refers to both fully electronic virtual meetings with no physical location, and hybrid meetings where some participants attend and participate in person and others participate through electronic means.

In order to meet the requirements to hold a meeting electronically, BC companies will need to consider the following:

(a) Restrictions in the articles of incorporation

The provisions of the BCBCA allowing for electronic meetings are subject to any contrary provisions that may be contained in the articles of a BC company. BC companies wishing to hold meetings electronically will need to carefully review their articles to ensure that there are no restrictions which could operate to prohibit or restrict electronic meetings.

(b) Location and notice

When sending notice of an AGM/SGM that will be held in a fully electronic format BC companies are required to include instructions regarding how to access the AGM/SGM, how to participate, and, if applicable, how to vote.⁴ Meetings that are fully electronic do not need to include a physical location in the notice and are not subject to any requirement to be held in British Columbia.⁵

For AGM/SGMs that are held in a hybrid format, BC companies will need to include both the electronic meeting information and the location information traditionally provided for in-person meetings. Subject to the articles of the BC company, the in person component of a hybrid meeting must be held in British Columbia.⁶

(c) Quorum requirements

Participants are required to be present either personally or by proxy to satisfy the quorum provisions for AGMs/SGMs set out in the BCBCA.⁷ This allows participants who attend a meeting virtually to be counted towards satisfying the quorum requirements.

(d) Participation and voting

In order to satisfy the BCBCA requirements for electronic meetings individuals must be able to participate in the electronic meeting, including being able to vote in real time during the meeting, being able to revoke a proxy, and having the opportunity to speak and discuss the matters presented.⁸ When any participants participate in a shareholder meeting electronically, the BCBCA requires that all votes be taken by poll rather than by a show of hands, unless the articles provide otherwise.⁹ Voting by poll helps to solve the challenge of assessing a show of hands in a virtual or hybrid meeting arrangement but can also present its own logistical challenges. BC companies will need to ensure that any meeting platform chosen includes a mechanism to verify the identity of all participants, as well as a mechanism so that participants can vote in a secure and confidential manner. In a hybrid meeting, a poll of in-person participants can be conducted in the traditional manner, with ballots being handed out, but there must also be a way for electronic participants to vote in real time. Restricting electronic participants to voting by proxy will not meet the requirements of the BCBCA.

Comments and considerations

The COVID-19 pandemic has illustrated how quickly the landscape for holding corporate meetings can change. The revised BCBCA allows BC companies to choose their preferred manner of holding meetings but also provides that electronic meetings may become mandatory under the regulations in certain circumstances.¹⁰ Any BC company without provisions for electronic meetings in its articles will wish to consider revising its articles to include provisions for electronic meetings. These revisions will ensure that BC companies will have flexibility to quickly and easily adapt to and comply with any future regulatory changes requiring electronic meetings in designated circumstances.

BC public companies may also want to look to the recommendations of proxy advisors. One of the two most prominent proxy advisors (Glass Lewis) supports providing an option for electronic attendance at shareholder meetings as long as there is disclosure addressing how shareholders can ask questions and addressing the technical and logistical issues that may arise in the case of fully electronic meetings. The other prominent proxy advisor (ISS) is silent on the matter.

This article provides a general overview of applicable law.

¹ See Act, SBC 2021, c 14
² See BCBCA, SBC 2002, c 57, s 174(2)
³ Ibid at s 140(1) and s 140(1.1)
⁴ Ibid at s 167(5.1)
⁵ Ibid at s 166(3)
⁶ Ibid at s 166(2)
⁷ Ibid at s 172(1)(b)
⁸ Ibid at s 140(b) and s 174(1)
⁹ Ibid at 173(2)(a)
¹⁰ Ibid at s 432(2)(v.2)

Adblock test (Why?)

"Electronic" - Google News
September 09, 2021 at 02:28AM
https://ift.tt/3nf8Bkx

British Columbia updates its corporate laws to accommodate electronic meetings - JD Supra
"Electronic" - Google News
https://ift.tt/3dmroCo
https://ift.tt/3bbj3jq