Guidance from Canadian securities regulators concerning virtual shareholder meetings: What public companies need to know

On February 25, 2022, the Canadian Securities Administrators (CSA) published guidance on virtual shareholder meetings for reporting issuers. Following the enactment of widespread public health restrictions during the COVID-19 pandemic, many corporations in Canada adopted a virtual format for their shareholder meetings. While the conduct of shareholder meetings is governed primarily by corporate law and a corporation’s own organizational documents, securities law requirements in respect of disclosure at shareholder meetings can also have an impact on the administration of such meetings.

To this end, the CSA has conducted informal consultations with market participants and stakeholders in respect of their experiences with virtual shareholder meetings in order to provide recommendations to assist reporting issuers in complying with their obligations under securities legislation, and encourage best practices for shareholder participation at virtual meetings.

While this CSA guidance is applicable to reporting issuers throughout Canada, corporations should also carefully consult applicable local legislation as well their own organizational documents when determining policies for virtual meetings. For corporations operating under British Columbia’s Business Corporations Act (BCBCA), Dentons published an Insight in September 2021 that addresses amendments to the BCBCA that relate to corporations holding and conducting virtual shareholder meetings.

This new CSA guidance specifically highlights two areas of attention for reporting issuers, commonly called public companies, seeking to hold virtual meetings:

1. Disclosure concerning shareholder access and participation at virtual meetings

Reporting issuers should provide clear and comprehensive disclosure in their management information circulars and other proxy materials in respect of the process for access, participation, and voting at virtual shareholder meetings. This should include fulsome explanations of the processes for registration, authentication, and voting for both registered and beneficial shareholders. Reporting issuers should also provide information about procedures for asking and answering questions.

Reporting issuers should also provide shareholders with contact information where they can obtain technical support should they experience difficulties during registration, or while accessing and participating in the virtual meeting itself.

1. Shareholder participation at virtual meetings

Reporting issuers should seek to ensure a level of shareholder participation in virtual meetings that is comparable to what they might reasonably expect at an in-person meeting. Virtual meetings should, among other things, provide shareholders opportunities to make motions, raise points of order, and raise questions. Shareholders should also be able to provide direct feedback to management in any question and answer segment of the meeting. Where shareholder proposals are to be voted on at the meeting, proponents should be given the opportunity to speak to those proposals.

While, as with in-person meetings, a certain level of discretion must be exercised in fielding questions and managing the meeting generally, virtual meeting practices should be made as transparent as possible, and consistent with established practices for in-person meetings where possible. The underlying goal of these meetings is the promotion of meaningful interaction between management and shareholders, and the procedures of these meetings, whether they be in-person or virtually, must achieve this goal.

Where meetings are contested, the CSA recommends that reporting issuers consult with legal counsel about the appropriateness of the virtual format. In such cases, reporting issuers should consider establishing a meeting protocol agreement with the dissident party in advance of such meeting.

Comments and considerations

While this newly-published guidance does not alter the formal requirements applicable to reporting issuers holding virtual meetings, it does highlight issues that securities regulators will look to in assessing the compliance of virtual meetings with requirements under securities law. The CSA has made clear that the necessity and prevalence of virtual meetings does not relieve reporting issuers of their existing responsibilities for fulsome and accurate disclosure of information, as well as meaningful and accessible participation at shareholder meetings.

This article provides a general overview of applicable law. For assistance regarding specific legal issues concerning electronic or hybrid AGMs or other securities law matters, please contact co-authors Kimberly Burns, Gregory Brown, or another member of Dentons Canada’s Securities and Corporate Finance group.