Virtual shareholder meetings have become ubiquitous for both public and private companies since the onset of the COVID-19 pandemic. Canadian securities regulators, stock exchanges and federal and provincial governments quickly responded to accommodate electronic meetings where it was otherwise not permitted. In British Columbia, Ministerial Order No. M116 was issued on April 21, 2020 (the “Order”), permitting companies to hold electronic meetings regardless of whether the company’s constating documents allowed them.
British Columbia has now amended the Business Corporations Act (British Columbia) (the “BCBCA”) to unequivocally and more permanently permit fully electronic and hybrid corporate meetings beyond the pandemic, enshrining certain key terms of the Order and clarifying related areas where uncertainty remained (the “Amendments”). A blackline showing the Amendments is available here.
The Order addressed uncertainty under the BCBCA about whether a company’s general meeting was required to be held at a physical “location” either inside or outside British Columbia. While it wasn’t clear that a fully electronic meeting did not have a “location”, this requirement prompted at least one company to seek court approval in March 2020 prior to convening a fully electronic shareholder meeting.
The Amendments remove the requirement that a fully electronic meeting have a “location.” In addition, the Amendments clarify that shareholders or proxyholders entitled to participate in a meeting of shareholders may do so electronically if all shareholders and proxyholders are “able to participate” in the meeting. This language replaces the requirement that shareholders be “able to communicate with each other.” While many platforms for electronic meetings permit shareholders to communicate with each other, the law had not been clear on the nature of communication required, including whether direct communication among shareholders was necessary, or whether communication through the chair was sufficient.
The scope of the requirement for shareholder participation at a meeting for a British Columbia company now differs from the requirement under other corporate statutes in Canada, which continue to refer to “communication” among participants. The Canada Business Corporations Act, for example, requires participants to be able to “communicate adequately with each other” during a meeting. It remains to be seen whether the Amendments have narrowed the scope for shareholder communication in practice. Participation, which includes the ability to hear the chair and other participants, voting, discussion and motions, differs in its details across platforms for electronic meetings, but must include communication at some level. It is expected that “participation” should capture the substance of all of the rights a shareholder would have at a physical meeting.
The Amendments do not distinguish between uncontested and contested shareholder meetings, the latter of which may bring enhanced pressure on, and scrutiny of, a chair’s decisions in managing shareholder participation.
Unlike the Order, which overrides the articles of companies that explicitly do not permit fully electronic meetings, the Amendments do permit companies to place restrictions in their articles in respect of fully electronic meetings, if they so choose.
The Amendments also confirm that if a company convenes an electronic meeting of shareholders, it must permit and facilitate electronic participation in the meeting, and the accompanying notice of meeting must contain instructions for attending, participating and voting at such meeting. The Amendments include the power to make regulations relating to notices of and procedures for voting at electronic meetings.
The Amendments apply similarly to meetings of directors.
For more information regarding electronic shareholder meetings, view our Proxy Season Guide 2021 or contact a member of our Corporate Finance & Securities Group or Corporate Commercial Group.