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 emerging public health and safety crisis posed by the coronavirus pandemic (COVID-19). The Staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance and Division of Investment Management subsequently issued guidance for conducting virtual annual meetings under these unprecedented circumstances.

Post-Proxy Filing

The Staff confirmed that if a company has already mailed and filed its proxy materials, the company can notify shareholders of a change in the date, time or location of the annual meeting without amending its definitive proxy materials or mailing additional soliciting materials if the company issues a press release announcing the change, files the announcement as definitive additional soliciting material on EDGAR, and takes all reasonable steps necessary to inform other interested parties in the proxy solicitation process (e.g., any proxy service providers and applicable national securities exchanges) of the change. These actions should be taken promptly after the decision to hold a virtual meeting is made and, in any case, sufficiently in advance of the annual meeting. Therefore, companies that have already filed and mailed their definitive proxy materials would not need to mail additional soliciting materials (including new proxy cards) solely to switch to a “virtual” or “hybrid” meeting if they follow the steps described above for announcing a change in the meeting date, time, or location.

Pre-Proxy Filing

To the extent a company has not filed its proxy materials and plans to conduct a virtual meeting, the Staff emphasized the importance of notifying shareholders, proxy service providers and other interested parties of such plans promptly and providing robust disclosure in the proxy statement regarding logistical details of the virtual meeting. Companies should, among other things, consider providing disclosure regarding the following logistical details:

  • How shareholders can remotely access, participate in and vote at the annual meeting.
  • Whether the meeting will be conducted using audio or live video webcast.
  • The process for handling technical difficulties.
  • General rules of procedure applicable to virtual meetings (timelines/limits for questions, ordering of questions, etc.).

Shareholder Proposals

The Staff also encouraged companies to allow proponents of shareholder proposals the ability to present their proposals through electronic media, to the extent permitted by state law. To that end, the Staff will consider a shareholder proponent’s failure to attend the annual meeting “due to the inability to travel or other hardships related to COVID-19” to be “good cause” under Rule 14a-8(h)(3) should the company seek to use Rule 14a-8(h)(3) as a basis to exclude a proposal submitted by the shareholder proponent for any meeting held in the following two calendar years. For companies holding virtual meetings, Rule 14a-8(h)(2) permits shareholder proponents to present their proposals through electronic media (if otherwise permitted by the company).

State Law & Organizational Document Considerations

As a threshold matter, the availability of virtual meetings is dependent on applicable state law, as well as a company’s organizational documents. In line with the Staff’s guidance, applicable state law and the company’s organizational documents should be reviewed to confirm what form of virtual meeting, if any, is permissible.

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.

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Photo of Kevin Douglas Kevin Douglas

Kevin Douglas has deep experience representing public companies on corporate and securities laws related matters, including companies within the healthcare industry. Kevin’s public company practice focuses on corporate governance matters, securities laws compliance, mergers and acquisitions, corporate finance and shareholder activism. His representative…

Kevin Douglas has deep experience representing public companies on corporate and securities laws related matters, including companies within the healthcare industry. Kevin’s public company practice focuses on corporate governance matters, securities laws compliance, mergers and acquisitions, corporate finance and shareholder activism. His representative experience has ranged from providing SEC disclosure advice to the audit committee of a Fortune 100 company to representing an NYSE-listed company in connection with its $4.3 billion acquisition by another public company to representing another NYSE-listed company in connection with its issuance of $2.2 billion in senior notes. Kevin has also represented private companies in a wide variety of mergers and acquisition, corporate finance, and other corporate law matters.

Photo of Jay Knight Jay Knight

Jay Knight is head of the firm’s Capital Markets Subgroup. His practice focuses on securities offerings, mergers and acquisitions, real estate capital markets, structured finance, and the general representation of public companies and underwriters. Since his return to private practice in 2012 after…

Jay Knight is head of the firm’s Capital Markets Subgroup. His practice focuses on securities offerings, mergers and acquisitions, real estate capital markets, structured finance, and the general representation of public companies and underwriters. Since his return to private practice in 2012 after having served five years in the Securities and Exchange Commission’s (SEC) Division of Corporation Finance, Jay has represented both issuers and underwriters in connection with initial public offerings (IPOs), follow-on and secondary offerings, at-the-market (ATM) programs, tender offers, SPACs, de-SPACs, and mergers and acquisitions, involving companies in a wide range of industries, including healthcare, real estate (REITs), retail, life sciences, defense and restaurant, among others.

Photo of Eric Knox Eric Knox

Working with both national and local companies in the REIT, healthcare, food and petroleum refining sectors, Eric Knox routinely counsels public and private companies on a variety of corporate and securities issues.

Photo of David Venturella David Venturella

David Venturella is an associate in the Corporate & Securities Practice Group. His practice focuses on mergers and acquisitions, securities laws compliance and disclosure, corporate governance, and capital markets transactions. David works with clients operating across a broad range of industries, including healthcare…

David Venturella is an associate in the Corporate & Securities Practice Group. His practice focuses on mergers and acquisitions, securities laws compliance and disclosure, corporate governance, and capital markets transactions. David works with clients operating across a broad range of industries, including healthcare, behavioral health, home health and hospice, REITs, and restaurants.