In response to the state of emergency declared by the Government of Ontario on March 17, 2020, on March 30, 2020, the Ministry of Government and Consumer Services passed Ontario Regulation 107/20 (the "Order"), an emergency order under the Emergency Management and Civil Protection Act to assist corporations with fulfilling the legislative requirements around corporate meetings while adhering to physical distancing and self-isolation mandates. The Order temporarily suspends the operation of certain provisions of the Ontario Corporations Act and Business Corporations Act to provide flexibility in how and when corporate meetings can be held and is retroactive to March 17, 2020. The Order affects the operation of corporate meetings for business corporations, not-for-profit corporations, insurers, and share capital social clubs governed by the Corporations Act or the Business Corporations Act of Ontario.
Firstly, the Order has broadened the means by which a business or not-for profit corporation (an "Ontario Corporation") can hold its meetings of directors, shareholders or members. While the province remains in a state of emergency, an Ontario Corporation can hold meetings and allow attendees to vote by telephonic, electronic, or other communication medium despite any provision in such Ontario Corporation's constating documents that otherwise prohibit the use of such media. These virtual facilities, however, must permit simultaneous and instantaneous communication among the attendees in order to meet the requirements of the Order.
If a virtual meeting is not viable for an Ontario Corporation, the deadline for members' and shareholders' meetings that are scheduled to take place in 2020 has been extended. Ordinarily, an Ontario Corporation's annual general meeting ("AGM") must be held within 15 months of the last preceding AGM. Under the Order, the deadline to hold an Ontario Corporation's AGM has been extended in two specific circumstances:
- If the deadline for the AGM falls within the period of the declared emergency, the AGM may now be held within 90 days after the date the emergency is declared over; and
- If the deadline for the AGM falls within 30 days after the end of the emergency, the AGM may now be held within 120 days after the date the emergency is declared over.
These deadline extensions allow an Ontario Corporation to continue to hold its AGM in-person after the end of the declared emergency.
Federal Businesses and Not-For-Profit Corporations
Unlike the Government of Ontario, the federal government has not provided blanket relief during this state of emergency for corporate meetings held by businesses and not-for-profit corporations incorporated under the Canada Business Corporations Act or the Canada Not-For-Profit Corporations Act (a "Federal Corporation").
Directors' meetings held by a Federal Corporation must continue to satisfy the legislative requirements and associated regulations with respect to virtual meetings. Directors' meetings can be held virtually upon the unanimous consent of the directors, as long as all participants are able to communicate adequately with each other during the meeting and the Federal Corporation's by-laws do not expressly prohibit such virtual participation.
With respect to AGMs, Corporations Canada has clarified that a Federal Corporation must still hold its AGM in compliance with existing legislative time lines. Therefore, Federal Corporations are still required to have an AGM within 15 months of the previous AGM or 6 months from the entity's last financial year-end, whichever occurs first.
In addition, Corporations Canada has clarified that virtual AGMs are only permitted if the Federal Corporation's by-laws specifically allow for virtual meetings. Absent such allowance, the Federal Corporation can hold a partially virtual meeting, where some participants attend in-person and others participate through a virtual channel, as long as such participation is not expressly prohibited by the Federal Corporation's by-laws. Where the Federal Corporation's by-laws expressly prohibit virtual meetings or are silent on the topic, it may be possible for the board of directors to change the by-laws of the Federal Corporation with the change effective until the next meeting of shareholders or members when the change can be confirmed or rejected. If holding a virtual or partially virtual meeting, it is important that they comply with the regulations under the entity's governing act. In particular, such virtual facility must allow the Federal Corporation to verify, tally and present votes while maintaining voter anonymity.
If a virtual or partially-virtual meeting is not possible under an entity's constating documents or other circumstances to delay the AGM arise as a result of COVID-19, a not-for-profit corporation can apply to delay calling their AGM when it would be detrimental to call the meeting within the normal timeframe. Application must be made by email to IC.corporationscanada.IC@canada.ca at least 30 business days before sending the notice calling the meeting. Federally incorporated businesses, on the other hand, must obtain court approval to delay an AGM. Approvals are granted on a case-by-case basis and may be difficult to obtain during the COVID-19 pandemic, given the very limited operations of the courts at this time, details of which can be found here.
All levels of government continue to release guidance and policies to best accommodate and facilitate business in this unprecedented environment. It is possible that the policies and guidance contained in this post will evolve. Overall, it is prudent to refer to the appropriate level of government to determine what accommodations are permitted during this state of emergency.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.