NYS Temporarily Lifts Prohibition on Virtual-Only Annual Meetings
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Our Advisory regarding considerations for conducting annual shareholders' meetings in light of COVID-19 noted, among other things, that state law governs whether to permit virtual annual meetings, and that although New York has procedures to permit participation for those not physically present, an in-person meeting is required for corporations incorporated in New York.
In response to the COVID-19 health crisis, and its impact on upcoming annual meetings, Governor Andrew M. Cuomo issued an Order on March 20, 2020, pursuant to his authority under Article 2-B, Section 29-A of New York's Executive Law (Section 29-A), suspending the requirement under Section 602 of New York's Business Corporation Law for in-person shareholders' meetings. Other applicable provisions of Section 602 (including requirements for remote participation) are not impacted by the Order. In addition, requirements under federal securities laws and the corporations' governance documents continue to apply.
No suspension under Section 29-A may extend beyond 30 days, so permission for virtual meetings will expire on April 19, 2020. Although the Governor has the power to (and likely will) extend the suspension for additional periods of up to 30 days each, companies should remain flexible with respect to their meeting plans, and continue to consider other options, including a temporary postponement. Whatever option the board and management choose, they should be careful to follow the SEC's recent guidance regarding the inclusion of disclosure in proxy statements regarding the possibility that the date, time, or location of the annual meeting may change due to COVID-19 concerns.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.