CSA issues guidance on virtual shareholder meetings

Virtual shareholder meetings are facing additional scrutiny from regulators amid concerns that retail investors may be disadvantaged by the format.

The Canadian Securities Administrators (CSA) issued revised guidance on the use of virtual shareholder meetings — an emergency solution that allowed companies to hold annual meetings during the Covid-19 pandemic.

Since then, the law governing shareholder meetings has been amended to facilitate and set requirements for virtual meetings.

However, these meetings have raised concerns with shareholder advocates: “They have expressed that virtual-only meetings present challenges for shareholders wishing to exercise their rights and express themselves to management, as well as difficulties accessing and participating in the virtual meetings,” the CSA said in a release.

In response, the CSA has issued updated guidance that aims to ensure companies are meeting their obligations to shareholders and to encourage companies to facilitate shareholder participation.

That guidance advises companies to ensure shareholders receive clear disclosure on how to participate in virtual meetings — including on voting and questioning management.

“The ability to attend and participate in a shareholder meeting should not require anything more than a basic level of technological proficiency,” it said.

To that end, the CSA is pushing issuers to ensure shareholder participation is as easy online as it would be in person.

This includes simplifying registration and authentication procedures; enabling shareholders to make motions, raise points of order and ask questions; and clearly setting out how shareholder proposals will be presented and voted on.

The regulators also said companies’ chairs should be technically proficient with the platform used to host a virtual meeting.

Additionally, they called on issuers to follow best practices on carrying out virtual shareholder meetings, including potentially allowing shareholders to participate either in-person or online.

The CSA noted that regulators’ staff “will continue to monitor the practice of virtual shareholder meetings, including reviewing disclosure in proxy-related materials during the upcoming proxy season.”