SEC grants proxy meeting flexibility with new guidance
The SEC will allow companies to postpone their annual meetings, change the location or, in some cases, host a virtual shareholder meeting if an in-person meeting cannot go ahead.
The regulator released new guidance on March 13 that gives greater flexibility to issuers as they grapple with the effects of Covid-19. If a company intends to change the date or location of its meeting, it should include a contingency plan in its proxy materials, the SEC advised.
‘For issuers that have not yet filed and delivered their definitive proxy materials, such disclosures should be in the definitive proxy statement and other soliciting materials,’ notes the statement, adding that issuers that have already filed and mailed their definitive proxy materials would not need to mail additional soliciting materials, including new proxy cards.
Legal hurdles for some virtual meetings
Most US states allow issuers to offer virtual-only shareholder meetings, while seven states require in-person AGMs. Despite the global pandemic ahead of the US proxy season, no amendment to the Business Corporation Act has happened in these seven states, which include Wisconsin, South Carolina, New York and Alaska.
Thirteen states – including Nebraska, Nevada and Virginia – allow hybrid meetings, requiring a physical component to a virtual meeting.
Under the current state corporation law, virtual-only meetings are allowed in 30 US states including Delaware, which means more than half of all US companies are able to hold a virtual-only meeting.