Page 11 - CCCA Magazine Fall 2019

{ LEGAL innOvATiOn }

the sloW Adoption oF the VirtuAl Agm

By Charles-Antoine Soulière and Lauren Bélanger-Dibblee

Virtual annual general meetings (AgMs) have been discussed

and considered by several issuers in Canada over the past few
years, but, so far, only a few Canadian companies have actually
held virtual-only meetings.

n the United States, the virtual meet- Proponents of the virtual-only ap- Therefore, before deciding to hold a
ing trend began in the early 2000s when proach assert that such meetings increase virtual-only meeting, companies should
iDelaware corporate law was amended accessibility for shareholders who are geo- be mindful that shareholders taking part
to allow companies to hold virtual-only graphically dispersed while reducing costs in the meeting virtually have the same op-
as well as hybrid AGMs. As the name for renting equipment, space and travel. portunities as those in traditional share-
implies, virtual-only meetings are held In addition, since shareholder questions holder meetings. Clear procedures and
entirely virtually, without any in-person are usually sent ahead of time in the con- processes as well as suffcient technologi-
interaction between the management and text of virtual meetings, management cal means should be put in place to pro-
directors of a company and its sharehold- can be better prepared to fully answer its mote transparency and participation.
ers. Hybrid meetings, on the other hand, shareholders. Finally, shareholders may While legislation and technology in
are held in-person with concurrent online also be more at ease to ask questions, since Canada allow for AGMs to be held vir-
broadcast or the participation of share- the forum is less intimidating. tually, our view is that the adoption of
holders via electronic means. However, critics argue that the ab- virtual-only meetings will remain slow
In recent years, several high-profle sence of physical contact between the in Canada in the coming years, as com-
U.S. companies, such as Hewlett-Packard, directors and shareholders has a negative panies remain cautious about the reaction
General Motors and Sprint, have opted impact on the quality of the dialogue, of their shareholders. However, we expect
for virtual-only meetings. Further, Broad- discussion and debate. The lack of trans- the number of hybrid meetings to in-
ridge Financial Solutions, Inc., a provider parency is also denounced, as some say crease, as technology enables more virtual
of online shareholder meeting technol- the questions are fltered by issuers and interaction and participation with the in-
ogy, reported that during the frst six answers are provided to only the easiest person portion of the meeting. ❚
months of 2018, 212 virtual meeting were and most convenient ones. Finally, the
held (compared to 180 over the same pe- ability for the chair to mute people who
riod in 2017) in the U.S. wish to speak is contested. Charles-Antoine Soulière is part-
ner in McCarthy Tétrault LLP’s
Meanwhile in Canada, the frst vir- Important to note is that leading Business Law Group in Quebec
tual AGM took place in July 2017 and, proxy advisory services frm Glass Lewis City. His practice focuses mainly
since then, only a handful of virtual- generally recommends voting against on securities, corporate fnance,
regulation of insurance compa-
only meetings have been held. The members of the board’s governance nies and fnancial institutions,
Canada Business Corporations Act is committee at issuers that plan on hold- mergers and acquisitions and
not a hurdle in this context, as it allows ing virtual-only AGMs if they do not corporate governance.
shareholder participation in meetings provide robust proxy disclosure assuring Lauren Bélanger-Dibblee is a
through electronic means. However, as shareholders that they will have the same summer student with McCarthy
the provincial corporate legislation is rights and opportunities to participate Tétrault LLP. She has worked as
a researcher for two judges of the
not uniform, issuers governed by pro- as they would at an in-person meeting. Superior Court, was involved in
vincial legislation should review their ISS, another prominent proxy advisory a start-up legal clinic and volun-
corporate statutes and by-laws before services frm, has yet to take a formal po- teered for organizations such as
considering a virtual AGM. sition on virtual meetings. Pro Bono Students Canada and
Université Laval’s legal aid clinic.

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