Emergency order provides interim flexibility for corporations’ meeting requirements

On March 31, 2020, the government of Ontario issued an emergency order pursuant to the Emergency Management and Civil Protection Act in response to the province’s Declaration of Emergency. The emergency order is welcomed amongst many Ontario corporations seeking flexibility in connection with the meeting requirements prescribed by governing statute or its constating documents. In particular, the emergency order provides for additional (albeit temporary) flexibility to directors and shareholders wishing to, or needing to, meet virtually or electronically during the Covid-19 pandemic.

Corporations Act

Schedule 1 of the emergency order applies to organizations governed by the Corporations Act and provides the following relief in connection with meetings requirements:

1. Temporary suspension of section 125.1 of the Corporations Act, which means that meetings of members or shareholders of a corporation may be held by telephone or electronically, despite any provision in the letters patent, supplementary letters patent or corporate by-laws that provides otherwise;
   
2. Temporary suspension of subsection 159(1) of the Corporations Act, which means that if a meeting of shareholders and members for the election of directors is required to be held in 2020, it no longer has to be held within the first 3 months of the year; rather, such a meeting may now be held within 90 days after the date that the emergency is terminated;
   
3. Temporary suspension of subsection 283(3.1) of the Corporations Act, which means that meetings of directors or of committees of directors may be held by such telephone, electronic or other communication facilities that would enable all persons participating in the meeting to communicate with each other simultaneously and instantaneously, despite any provision in the letters patent, supplementary letters patent or corporate by-laws that provides otherwise;
   
4. Temporary suspension of section 293 of the Corporations Act, which means that the timeframe within which a corporation’s annual meeting of its shareholder or members must be held (under normal circumstances, within 18 months after incorporation and subsequently within 15 months after the last preceding annual meeting) may be extended as follows:

a. if the last day on which a meeting is required to be held is a day that falls within the period of the declared emergency, then the meeting is instead required to be held within 90 days day after the date that the emergency is terminated; or

b. if the last day on which a meeting is required to be held is a day that falls within the 30-day period that begins on the day after the day the emergency is terminated, then the meeting is instead required to be held within 120 days after the date that the emergency is terminated.

Business Corporations Act

Schedule 2 of the emergency order applies to corporations governed by the Business Corporations Act and provides similar reprieve in connection with meetings requirements:

1. Temporary suspension of section 94 of the Business Corporations Act, which means that the timeframe within which directors must call an annual meeting of the shareholders (under normal circumstances, not later than 18 months after the corporation comes into existence and subsequently not later than 15 months after holding its last preceding annual meeting) may be extended as follows:
   
   

   a. if the last day on which a meeting is required to be held is a day that falls within the period of the declared emergency, then the meeting is instead required to be held within 90 days day after the date that the emergency is terminated; or
   
   b. if the last day on which a meeting is required to be held is a day that falls within the 30-day period that begins on the day after the day the emergency is terminated, then the meeting is instead required to be held within 120 days after the date that the emergency is terminated;
   
   c. Furthermore, despite any provision in the articles or by-laws of a corporation that provides otherwise, a shareholders’ meeting may, in the interim, be held by telephone conference or electronic means.
   

2. Temporary suspension of subsection 126(13) of the Business Corporation Act, which means that meetings of directors or of committees of directors may be held by telephone, electronic or other communication facilities that would enable all persons participating in the meeting to communicate with each other simultaneously and instantaneously, despite any provision in the articles or by-laws that provides otherwise.

Federally Incorporated Corporations

Unfortunately, as of the date of this post, corporations and organizations governed by the Canada Business Corporations Act and the Canada Not-for-Profit Corporations Act are still required to hold an annual general meeting within 18 months of incorporation, and subsequently within 15 months after the last preceding annual meeting, or 6 months after the corporation’s financial year-end. Corporations Canada has further recommended that virtual or hybrid shareholder meetings be held, so as to comply with prescribed social distancing obligations. In order to postpone an annual general meeting, corporations governed by the Canada Business Corporations Act will still require court approval. However, not-for-profit organizations governed by the Canada Not-for-Profit Corporations Act may apply to Corporations Canada via email to defer an annual general meeting if it would be detrimental to hold the meeting within the normal timeframe.