Canada: BC Credit Union AGMs In The Time Of COVID-19

AGM season is coming up for many credit unions in BC, but in light of the COVID-19 pandemic and public health measures enacted by the provincial government, much like daily life, credit union annual general meetings may also need to adapt to new norms in 2020.

Section 74(1) of the Credit Union Incorporation Act ("CUIA") requires BC Credit Unions to hold their AGMs within 135 days of their financial year end. However, with a ban on events of greater than 50 people currently in effect in the province, and potential to see this capacity limited further in the coming weeks as the COVID-19 pandemic evolves, many credit union AGMs may not be able to proceed as usual in spring 2020. So, what measures can a credit union take to ensure it complies with financial institutions legislation, while looking out for the health and safety of its members?

AGM Deferral

Perhaps the best option is for credit unions to defer their AGMs. Under section 74(2) of the CUIA, the BCFSA has the power to make orders extending the deadline for holding a credit union's AGM by up to six months. On March 13, 2020, the BCFSA sent a letter to the CEOs and General Managers of credit unions in BC, informing them that BCFSA is open to considering deferrals. At this time, it does not appear the BCFSA is considering a blanket deferral of all credit union AGMs, which would be within their power under this section. Rather, credit unions wishing to delay their AGMs should submit individual applications, which will be considered by the BCFSA on a case-by-case basis. Factors involved in coming to a decision will include COVID-19 as well as other matters, including perhaps the credit union's membership and ability to hold electronic meetings.

The BCFSA notes that a credit union deferring its AGM may need to present its membership with interim audited financial statements at its AGM. This situation will arise in a case where a credit union holds its AGM more than 6 months following its financial year end, and is a requirement of section 74.1 of the CUIA.

Electronic Meetings

A credit union may also choose to host electronic meetings, if its rules allow. While the CUIA does not explicitly permit electronic meetings, it also does not disallow them. The CUIA requires that a credit union provide notice to members of the date, time and place of a meeting, within the province of British Columbia. Whether a credit union can hold an electronic meeting, then, largely comes down to whether its rules permit electronic voting by members.

A credit union whose rules expressly permit electronic voting at an annual general meeting (and not only on an election of directors or special resolutions) should be able to carry out an electronic meeting. A credit union's rules may provide for voting by electronic means per section 72 of the CUIA. However, absent a rule allowing electronic voting, section 71 states that voting must be by show of hands, which would necessitate an in-person meeting.

There is some risk to choosing to hold a meeting exclusively electronically, because it is not certain that those who attend a meeting remotely are actually "present" at a meeting for the purposes of establishing a quorum. Certain corporate statutes, such as the Business Corporations Act (British Columbia), deem persons who participate in meetings electronically as being present at the meeting, but the CUIA does not have a similar provision. It is possible to take the position that members who attend a meeting virtually count toward a quorum. If there were doubt about the validity of a virtual meeting, a credit union could seek to obtain a rectifying court order after the meeting is held under section 107 of the CUIA. However, the risk in this case is that such an order is not guaranteed to be granted and the meeting could be invalidated. To avoid this issue, it may also be possible to hold a hybrid meeting, which is discussed in further detail below.

It's also worth considering that electronic only meetings are not a perfect solution. They may prevent elderly members, members without the financial resources to have their own electronic means of communication and others from participating in meetings. A significant amount of work may also need to be done on the credit union's side to put in place the technological infrastructure that would enable shareholders to participate in a meeting remotely.

Multiple or Hybrid Meetings

In-person meetings will likely be a last resort in these uncertain times, however, there is an in-person option that may comply with public health orders and the CUIA. If the rules of the credit union permit, section 75 of the CUIA allows a credit union to hold multiple meetings at different places or times, keeping the number of participants at each meeting low to enable social distancing.

Further, for credit unions whose rules permit both virtual voting and multiple meetings, a hybrid meeting would be possible. This form of meeting would involve holding a limited-attendance in-person meeting to ensure quorum is met, which could be limited in attendance to board members and executives of the credit union, while the remaining members participate virtually.

BC Credit Union AGMs In The Time Of COVID-19

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