With companies either shutting down or changing how they work due to efforts to contain the COVID-19 virus, it’s understandable that the annual shareholder meeting has come under scrutiny. Can you delay it? Forget about having one? Carry on regardless?
The Securities and Exchange Commission has issued new guidance (available here) to assist companies and investors with their upcoming annual shareholder meetings, according to a Fenwick & West client note. The guidance sets forth procedures for updating the time, date or location of a stockholder meeting and eliminates the federal securities law requirement that such change require a full mailing of notice to stockholders.
Basically, companies can notify shareholders of a change in the date, time, or location of the annual meeting without mailing additional soliciting materials or amending its proxy materials if it:
- Issues a press release announcing such change
- Files the announcement as definitive additional soliciting material on EDGAR and
- Takes all reasonable steps necessary to inform other intermediaries in the proxy process and other relevant market participants (such as the securities exchanges) of the change.
Note, however, that state laws—including the Delaware General Corporation Law—may still require notice be mailed to stockholders if there is a change of location for a called meeting. So companies that have not yet filed a proxy statement should include provisions to hold a joint/hybrid virtual meeting with the physical meeting that is planned, and include disclosure that the company will issue a press release notifying stockholders if the physical meeting is canceled due to public health or logistical concerns, the note says.