On March 20, 2020, to address public health concerns over public gatherings in the face of the coronavirus (COVID-19), New York Governor Andrew Cuomo issued Executive Order No. 202.8, available here, enabling New York corporations to hold annual shareholder meetings solely via remote communication, also referred to as “virtual-only” meetings. The Executive Order alleviates the concerns of many New York public companies that have been attempting to set up their annual meetings for the 2020 proxy season in a manner that complies with New York law and also protects the health and safety of their directors, executives, employees, shareholders and other constituencies that would typically attend annual meetings. The Executive Order is effective through April 19, 2020.
Without the Executive Order, the New York Business Corporation Law requires New York corporations to hold annual meetings at a physical location, although they may provide their shareholders with the option to attend via remote communication. The Executive Order, among other things, temporarily suspends subsection (a) of Section 602 and subsections (a) and (b) of Section 605 of the Business Corporation Law “to the extent they require meetings of shareholders to be noticed and held at a physical location.”
On the same day, New Jersey Governor Phil Murphy signed into law legislation, available here, permitting New Jersey companies to hold hybrid or virtual-only annual shareholder meetings during a state of emergency, as long as the board of directors authorizes and adopts guidelines and procedures governing such a meeting.
These state actions follow efforts by the Securities Exchange Commission (SEC) to respond to the developing COVID-19 crisis by providing flexibility for public companies seeking to change the date and location of annual shareholder meetings and to use a virtual shareholder meeting, without incurring the cost of additional physical mailing of proxy materials. See our recent alerts available here and here to learn more about the SEC’s March 13th guidance on virtual meetings and related guidance from proxy advisor Glass Lewis.
Given that many companies hold their annual meetings well into May and June and that the ongoing impact of COVID-19 is dynamic and uncertain, we will continue to monitor for extensions of the New York Executive Order and other related developments.
We would like to commend our Senior Partner, Ira Millstein, for his contribution with respect to this important issue.