On April 24, 2020, the Ontario government issued an amendment to its initial emergency order in connection with meetings for corporations. The initial order, which came into effect at the end of March of this year and is discussed in my earlier post, provides temporary flexibility and relief from otherwise strict meeting requirements for corporations governed by the Corporations Act (Ontario) and the Business Corporations Act (Ontario).
The recent amending order (also known as Ontario Regulation 178/20) addresses various gaps found in the initial order and includes helpful guidance and accommodations for co-operative corporations and condominium corporations as well. For more information on how the amending order affects corporations governed by the Condominium Act, see my colleague Matthew Wilson’s blog.
Corporations Act
In addition to the temporary flexibilities provided by the initial emergency order, the amending order delivers the following supplementary clarifications and guidance for corporations governed by the Corporations Act:
a) Changes to meeting after notice is given
If i) notice of a shareholders’ meeting has been given, and ii) such meeting is to be held on a day during the declared emergency period, and iii) after the notice is given, the date, time, and/or place of the meeting is changed so that the meeting can be held via telephone conference or other electronic means, then a further notice of the meeting is not required to be given. However, those who are entitled to receive notice must be informed of the meeting change(s) in a reasonable manner and within a reasonable timeframe.
b) Information to be provided before annual meeting
If an annual shareholders’ meeting is to be held on a date between March 17, 2020 and 120 days after the date that the declared emergency is terminated (inclusive), then the usual requirement for directors to provide financial statements for a period not more than 6 months prior the meeting is temporarily lifted. The removal of the 6-month parameter remedies a technical omission in the initial order, which required a corporation to hold a meeting within 6 months after its financial year-end.
c) Method of voting or election
If a meeting of shareholders or members is properly held via telephone conference or other electronic means, then if feasible, the Chair of the meeting will conduct a vote or election either by ballot or other methods permitted by the by-laws of the corporation. Otherwise, the Chair may direct the vote or election by alternate means.
Business Corporations Act
Further, the amending order delivers the following supplementary clarifications and guidance for corporations governed by the Business Corporations Act:
a) Time extension for annual meetings
i) If an annual shareholders’ meeting is required to be held on a day that falls within the period of the declared emergency, then the meeting date deadline is extended to the 90th day after the emergency is terminated.
ii) If an annual shareholders’ meeting is required to be held on a day that falls within the 30-day period from the date that the emergency is terminated, then the meeting date deadline is extended to the 120th day after the emergency is terminated.
iii) If a meeting is required to be held pursuant to one of the above timelines, then the directors of a corporation may call the meeting to allow the corporation to comply with such parameters at a time that is reasonable in the circumstances. The addition of this provision to the amending order relieves the directors from the usual requirement of calling an annual shareholders’ meeting not later than 18 months after the corporation comes into existence and subsequently not later than 15 months after holding the last annual meeting.
b) Shareholders’ meeting by electronic means
Despite any provision in the articles, by-laws or unanimous shareholder agreement that provides otherwise, a shareholders’ meeting may be held via telephone conference or other electronic means, and a shareholder who, through those means, votes at a meeting or establishes a communication link to the meeting is deemed to be present at the meeting.
c) Changes to shareholders’ meeting after notice is sent
If i) notice of a shareholders’ meeting has been given, and ii) such meeting is to be held on a day during the declared emergency period, and iii) after the notice is given, the date, time, and/or place of the meeting is changed so that the meeting can be held via telephone conference or other electronic means, then a further notice of the meeting is not required to be given. However, those who are entitled to receive notice must be informed of the meeting change(s) in a reasonable manner and within a reasonable timeframe.
d) Manner of voting at shareholders’ meeting
Where a shareholders’ meeting is properly held via telephone conference or other electronic means, the Chair will conduct the vote by a show of hands or by ballot, if feasible. Otherwise, the Chair may direct voting by alternate means.
e) Directors’ meeting by electronic means
Despite any provision of the articles, by-laws or unanimous shareholder agreement that provides otherwise, a directors’ meeting may be held via telephone, electronic, or other communication facilities that permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a director participating in the meeting by such means is deemed to be present at that meeting.
f) Information to be provided before annual meeting
If an annual shareholders’ meeting is to be held on a date between March 17, 2020 and 120 days after the date that the declared emergency is terminated (inclusive), then the usual requirement for directors to provide financial statements for a period not more than 6 months prior the meeting is temporarily lifted. The removal of the 6-month parameter remedies a technical omission in the initial order, which required a corporation to hold a meeting within 6 months after its financial year-end.
Retroactive Effects
The amending order distinctively provides that it, and any further amending order, will be retroactive to March 17, 2020, which is the date on which the province declared a state of emergency.