In a previous blog post, we discussed the availability of virtual shareholder meetings (i.e., “virtual-only” and “hybrid” meetings) as a potential alternative to the traditional in-person meeting during the 2020 proxy season in light of the public health and safety crisis posed by the novel coronavirus (COVID-19) pandemic (we also discussed virtual annual meeting guidance provided by the SEC in a subsequent blog post). In response to COVID-19, states such as Connecticut, Georgia, New Jersey and New York have taken steps to remove barriers to virtual annual meetings under existing state law. Continue reading to learn more about steps these states are taking.
On March 21, 2020 and effective for meetings for the duration of Connecticut’s state of emergency as a result of the COVID-19 pandemic, the governor of Connecticut issued an executive order amending Section 33-703 of the Connecticut General Statutes to allow for a Connecticut corporation to hold any meeting of shareholders solely by means of remote communications, provided the corporation has implemented reasonable measures to verify each person participating remotely is a shareholder and to provide such shareholders a reasonable opportunity to participate in the meeting and vote on matters submitted to the shareholders. The executive order also invalidates any inconsistent statute, regulation or bylaw for the duration of the executive order’s effectiveness. Under the executive order, corporations must also make available the list of shareholders entitled to vote available for inspection beginning two days after notice of the meeting is given and continuing through the meeting on a reasonably accessible electronic network, provided that the information required to access such list is provided with the notice of the meeting and is only available to shareholders of the corporation. Prior to the executive order, Connecticut only allowed meetings conducted in-person with concurrent participation by remote communication (i.e., hybrid annual meetings).
On March 20, 2020 and effective for meetings through April 13, 2020, the governor of Georgia issued an executive order permitting corporations organized under Georgia law to hold annual meetings by means of remote communication in lieu of holding a physical meeting, provided that the corporation’s board of directors establishes procedures to enable verified shareholders and proxyholders with a reasonable opportunity to participate, be deemed present in person, and be permitted to vote upon matters submitted at the meeting. Further, the executive order suspended the provisions of Georgia law that require the notice of the meeting to contain information required to gain access to the list of shareholders entitled to notice of the meeting, provided that such information is otherwise made available to all shareholders in advance of the annual meeting. Prior to the executive order, Georgia did not permit virtual annual meetings and required in-person meetings.
On March 20, 2020 and effective for meetings through April 19, 2020, the governor of the State of New York suspended the application of Section 602(a) and Sections 605(a)-(b) of the New York Business Corporation Law, to the extent those sections require meetings of shareholders to be noticed and held at a physical location. Prior to the executive order, New York permitted only hybrid meetings and did not permit virtual-only meetings.
In addition, on March 16, 2020, New Jersey state legislators introduced new legislation to permit companies organized under New Jersey law to hold meetings of shareholders in part or solely by means of remote communication during a state of emergency. Under the New Jersey statute that the proposed legislation seeks to amend, virtual-only annual meetings are not permitted, although the statute does permit hybrid annual meetings.
For Connecticut, Georgia and New York, we anticipate that the temporal period for annual meetings covered by the executive orders will be extended beyond the currently applicable expiration dates, assuming that pandemic conditions continue. We also anticipate other states, including Massachusetts, may take similar measures to remove existing barriers to virtual annual meetings in light of the COVID-19 pandemic. Even if these actions are taken, companies will still need to review their organizational documents to confirm their ability to hold a virtual meeting without the need to amend their organizational documents.
If you have any questions, please feel free to email the authors directly or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.
About the Bass, Berry & Sims Corporate & Securities Practice
Public and private companies of all sizes across a variety of industries turn to Bass, Berry & Sims for counsel on a wide range of corporate matters, including mergers, acquisitions and dispositions; capital markets transactions; executive compensation issues; corporate governance; and shareholder activism. We serve as primary corporate and securities counsel to more than 35 public companies and have counseled on 150 deals ranging in size from $20 million to more than $15 billion over the past two years. Click here to learn more about the Corporate & Securities Practice at Bass, Berry & Sims.