SEC Staff Provides Guidance for Upcoming Shareholders' Meetings
Last updated March 19, 2020
Given the recent restrictions on travel and sizes of group gatherings imposed by federal, state and local governments, the Securities and Exchange Commission staff has published guidance to those issuers, shareholders and other market participants affected by COVID-19 having an upcoming shareholders’ meeting. This guidance intends to advise companies of the appropriate ways to change the date, time, location and format of their annual meetings. Most notably, the guidance seeks to assist those affected companies in holding virtual shareholders’ meetings (wherein no participants are in-person) or hybrid shareholders’ meetings (wherein some participate in-person and some participate virtually), via technology, in lieu of an in-person only meeting.
Per the staff guidance, companies making changes to their meeting and who have already filed and distributed their proxy materials are not required to send additional soliciting materials if the only purpose of said material is to adjust how the meeting will be held (i.e., changing an in-person meeting to a virtual or hybrid meeting).
To qualify, companies must (a) issue and file on EDGAR a press release announcing the changes, (b) take all reasonable steps to inform participants or proxies of the changes and (c) provide clear instructions on how each shareholder can actively participate in the meeting (e.g., how to submit questions, how to vote, how to address technical issues, etc.).
This is another example of the SEC reacting swiftly to new challenges posed by the COVID-19 virus. To review the SEC staff announcement detailing this guidance, please visit the SEC’s website.
While this announcement is tailored toward public companies, it should viewed as equally applicable to privately held companies. Whether it be board of director meetings, shareholder meetings or staff meetings, privately held companies should heed the SEC staff’s advice and provide attendees with various attendance options and notification of any changes made to a meeting’s location, format or date. Privately held companies should ensure that notice of any change is provided in accordance with the company by-laws and other governing documents.
To ensure your business is up-to-date on new regulations, or to inquire whether your business may seek relief from existing regulations due to COVID-19, please contact your CSG attorney today.
For more information pertaining to the coronavirus outbreak, please visit CSG's COVID-19 Resource Center.
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