The Canadian Securities Administrators (“CSA”) provided initial guidance on virtual shareholder meetings in February 2022 to: (i) assist reporting issuers in fulfilling their obligations under securities legislation; and (ii) recommend practices that facilitate shareholder participation. Following a review of virtual shareholder meeting practices over the last two years and in response to concerns raised by some stakeholders regarding their experience accessing and participating in virtual-only meetings, the CSA have now have published updated guidance for conducting virtual shareholder meetings.

CSA Guidance

As a result of the COVID-19 pandemic, many reporting issuers adopted, and continue to use, a virtual format for their annual shareholder meetings. The CSA’s updated guidance does not constrain the use of virtual meetings nor mandate movement to a hybrid or in-person meeting structure, however, it does provide enhanced guidance with respect to disclosure practices and improving shareholder participation.

Clear and comprehensive disclosure

In the updated guidance, the CSA remind issuers of the importance of providing clear and comprehensive disclosure in their management information circulars and proxy-related materials with respect to the logistics for accessing, participating in and voting at virtual meetings.

Issuers should provide plain language explanations of the registration, authentication and voting processes for both registered and beneficial shareholders and regarding how to obtain assistance in the event of difficulties. The procedures for submitting or asking questions and a description of how shareholder questions will be addressed at the meeting should also be disclosed.

Shareholder participation

The CSA advise that the ease, level and quality of shareholder participation at a virtual meeting should be comparable to that which shareholders could reasonably expect if they were attending an in-person meeting. Shareholders should not require anything more than a basic level of technological proficiency. Shareholder participation can be facilitated by:

• 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 the Q&A portion of the meeting;
• indicating where shareholder proposals will be presented and voted on at the meeting, coordinating with proponents of such proposals prior to the meeting and ensuring they are given a reasonable opportunity to speak to their proposals and respond to any questions;
• ensuring that the virtual platform’s functionality permits shareholder participation to the fullest extent possible; and
• ensuring that the chair of the meeting is experienced and knowledgeable in the platform being used for the virtual meeting.

In addition, the CSA recommend that reporting issuers consider holding their meetings in a “hybrid” format to allow for both in-person and virtual participation.

Proxy Advisors and Advocacy Groups

Similar positions have been taken by certain proxy advisory firms and shareholder advocacy groups. The Canadian Coalition for Good Governance (“CCGG”) has expressed concerns that virtual-only meetings limit shareholders’ abilities to exercise their rights and express themselves to the board of directors. The CCGG advocates for in-person attendance and recommends hybrid meetings over virtual-only meetings.

Glass Lewis has indicated that hybrid meetings broadly improve shareholder rights by expanding participation to those who are unable to attend in person but believe that virtual meetings have the potential to curb the ability of shareholders to meaningfully communicate with management. Glass Lewis looks for robust disclosure in a company’s circular that assures shareholders that they will be afforded the same rights and opportunities to participate as they would at an in-person meeting and will generally recommend voting against the chair of the governance committee where such disclosure is not provided.

What’s Next?

CSA staff will continue to monitor virtual shareholder meetings and review proxy-related materials during the upcoming proxy season and have indicated that further guidance may be issued, if required.

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