Virtual AGMs in a Time of Social Distancing (updated)

On April 21, 2020 the Province of British Columbia issued an order to allow companies, societies, and cooperative associations to hold electronic meetings during the Province’s state of emergency.

The order will allow corporations to hold meetings by telephone or other communications medium (e.g. video-conferencing) despite prohibitions against electronic meetings that may be set out under the Business Corporations Act, Societies Act, Cooperative Association Act, or a corporation’s own articles, bylaws, or rules. The order will enable corporations to reconcile their corporate governance obligations with public health orders  and advisories aimed at reducing the spread of COVID-19. In particular, some corporations may have been prevented from holding special or annual general meetings as a result of the provincial health officer’s order against gatherings of more than 50 people.

Now is a good opportunity to review your corporation’s articles and bylaws and consider removing any prohibitions against electronic meetings in the future. Boughton Law can work with your company, society, or cooperative association to modernize your corporate governance documents.

Original article continues below.

An annual general meeting (AGM) is a mandatory yearly gathering of the shareholders of a company or the members of a society. AGMs form a key element of corporate governance and are legally required under federal and provincial laws in Canada for incorporated companies and incorporated not-for-profit organizations (societies). At an AGM, the directors present an annual report about the company or the society’s performance in the past year and propose strategies moving forward. Certain housekeeping matters, such as the election of directors, also usually take place at an AGM.

In light of the COVID-19 pandemic, some companies and societies are facing the challenge of either delaying their AGMs until social distancing measures are lifted so they can be held in person, or holding AGMs through the use of remote meeting technologies.

For British Columbia companies, the Business Corporations Act, SBC 2002, c57 permits participation at AGMs through telephone or other communications media as long as everyone who is participating is “able to communicate with each other” and the company’s articles permit it. Similarly, the Societies Act, SBC 2015, c18 allows societies in British Columbia to hold AGMs by telephone or other means of communication, provided that all participants are able to communicate with each other and the society’s bylaws do not prohibit it.

Virtual AGMs today can be conducted in a number of different ways. Teleconference, videoconference, and other virtual meeting software are now commonly used and can allow for hundreds of participants to participate remotely. The company or society conducting a virtual AGM must still comply with notice requirements as set out under legislation and in its governing documents in the same way as it would for a traditional AGM held in person. For example, the company or society may be required to send notices by mail or electronic transmission to all of its shareholders or members to inform them of the time and date of the AGM and, in the case of any special business to be transacted, the nature of the business. As for the “place” of the AGM, the company or society would need to provide the particulars of the virtual meeting, such as a dial-in telephone conference number or a virtual meeting channel.

Given the uncertainty of when social distancing measures will be lifted, a company or society may want to consider holding its AGM virtually rather than delaying the AGM to a later date. This would also give organizations a valuable opportunity to actively engage with their shareholders or members during these difficult times.

Conducting a virtual or a semi-virtual AGM may also help ensure the comfort and safety of all participants even after social distancing restrictions end. If small gatherings are advisable by health officials at the time, a semi-virtual AGM can be held by having a few people, such as the board of directors, meet at the same physical location with the shareholders or members participating remotely through videoconferencing.

While the transition from a traditional in-person AGM to a virtual or semi-virtual AGM may pose a few challenges at first, organizations have a wealth of technological tools at their disposal to help run their businesses during these unprecedented times.

At Boughton Law, we continue to actively provide advice to clients on the impact of COVID-19 on the operation of their businesses in British Columbia. Please do not hesitate to contact us if you have any concerns about the effects of COVID-19 on your company or society.