The Importance of shareholder participation: CSA release updated guidance on virtual shareholder ‎meetings

On February 22, 2024, the Canadian Securities Administrators (the “CSA”) provided updated guidance regarding virtual shareholder meetings (the “2024 Guidance”). The 2024 Guidance is intended to assist reporting issuers in Canada in complying with their obligations under corporate and securities legislation when conducting virtual or “hybrid” (virtual and in-person) shareholder meetings.

Following the COVID-19 pandemic, certain corporate statutes in Canada were amended to permit virtual shareholder meetings and include requirements reporting issuers must meet when conducting virtual meetings. In conjunction with these amendments, the CSA released initial guidance in February of 2022 (the “Initial Guidance”) to assist issuers in complying with the amended requirements under corporate legislation.

The 2024 Guidance reflects an update, expansion and clarification of the Initial Guidance and emphasizes two principal areas of concern: disclosure to shareholders on how to access and participate at virtual meetings and facilitating shareholder participation at virtual meetings.

Disclosure to shareholders on how to access and participate at virtual meetings

The 2024 Guidance provides that in order for reporting issuers to fulfill their obligations under securities legislation, it is important that reporting issuers provide clear and comprehensive disclosure in management information circulars and associated proxy-related materials with respect to the logistics for accessing, participating and voting at a virtual meeting. It also notes that virtual shareholder meetings should not require anything more than a basic level of technological proficiency to meaningfully participate.

In meeting-related materials, issuers can accomplish this by providing plain language explanations of how both registered and beneficial shareholders can participate in a meeting, including information on:

• the registration, authentication and voting process for both registered and beneficial shareholders;
• how shareholders can obtain assistance in the event of difficulties during the registration, authentication and voting process; and
• how shareholder participation at the virtual meeting will be accommodated and managed during the meeting, including:
  • information on the procedures to allow shareholders to send or ask questions, in advance of and/or during the meeting,
  • how shareholder questions will be addressed during the meeting, or after if there is insufficient time to address all questions at the meeting, and
  • instructions for voting at the meeting.

Facilitating shareholder participation at virtual meetings

On a related note, the CSA in the 2024 Guidance encourages reporting issuers to provide for an ease, level and quality of shareholder participation at virtual meetings that is comparable to that which a shareholder could reasonably expect if they were attending an in-person meeting. In order to do so, the 2024 Guidance recommends:

• simplifying registration and authentication procedures;
• providing shareholders with opportunities to make motions or raise points of order;
• ensuring shareholders have the ability to raise questions and provide direct feedback to management in any question-and-answer segment of the meeting;
• indicating where shareholder proposals will be presented and voted on at the meeting, coordinating with proponents of those proposals in advance of the meeting, and ensuring proponents are given a reasonable opportunity to speak to the proposal and respond to any questions that arise from the proposal;
• ensuring any virtual platform used by an issuer has functionality permitting shareholder participation to the fullest extent possible; and
• ensuring the Chair is experienced and knowledgeable in the technological platform being used for the virtual meeting.

In addition, the 2024 Guidance recommends that reporting issuers consider holding hybrid meetings to allow for both in-person and virtual participation. The 2024 Guidance suggests that the use of hybrid meetings may ease some concerns that the CSA has raised as barriers to meaningful participation by shareholders at virtual meetings.

Conclusion

The CSA’s recommendations regarding disclosure and shareholder participation outlined in the 2024 Guidance represent a notable expansion from the Initial Guidance. The 2024 Guidance provides for more detailed recommendations when compared to the Initial Guidance, but overall, demonstrates the same intent to ensure meaningful participation by shareholders in virtual meetings is facilitated.

CSA notes that it will continue to monitor the practice of virtual shareholder meetings, including reviewing disclosure in proxy-related materials during the upcoming proxy season and signalled that further guidance and updates may be issued.