SEC Coronavirus Guidance on Shareholder Annual Meeting Engagement

On March 13, 2020, the SEC issued guidance regarding the effect of the coronavirus (COVID-19) on upcoming annual shareholder meetings. The SEC advised  that a company that has already mailed and filed its proxy materials can change the date, time, or location (including changing to a “virtual (or “remote-only”) meeting”) of its annual meeting without mailing additional proxy materials so long as that company promptly:

• Announces those changes in a press release;
• Files the announcement as definitive additional soliciting material on EDGAR; and
• Takes all reasonable steps to inform other relevant market participants and intermediaries of such change.

The ability to conduct virtual shareholder meetings is governed by state law and the company’s governing documents. If a company chooses to conduct virtual meetings, the SEC expects the company to promptly disclose all relevant information to its shareholders, including clear directions for how a shareholder will be able to participate in the virtual meeting.

The SEC recommends that companies provide alternative methods for shareholders or their representatives to present their proposals in compliance with Exchange Act Rule 14a-8(h) at the annual meeting. The inability of a shareholder to attend the annual meeting due to the coronavirus crisis will be considered “good cause” under Exchange Act Rule 14a-8(h) and will not serve a basis to exclude a proposal submitted by that shareholder for a meeting within the following two years.

Potential Considerations:

• Companies with upcoming annual meetings may want to consider changing the date of the meeting or moving to a virtual meeting or, if not already planned, a “hybrid” meeting allowing remote participation.
• If the Company has not yet mailed proxy materials, it may want to disclose in the mailing the possibility of changes to the date, time and location of the annual meeting due to the coronavirus crisis and/or provide directions for how to participate in a virtual or hybrid meeting.

We have posted other articles related to SEC guidance on the coronavirus which can be found here, as well as a Q&A regarding the coronavirus which can be found here.

The full text of the SEC Guidance is available here.

Your regular Locke Lord contact and any of the authors would be happy to assist you with these matters.

Visit our COVID-19 Resource Center often for up-to-date information to help you stay informed of the legal issues related to COVID-19.

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