As governments, regional authorities, and companies adopt measures to curtail the spread of coronavirus, we are seeing an impact on annual shareholder meetings to be held in the coming months. Coronavirus, a respiratory disease, has been detected in 70 locations internationally and has been deemed “a public health emergency of international concern by the World Health Organization. Here is a review of how some global markets are addressing the situation.
Update (March 31): In light of the dynamic nature of the ongoing crisis, we have amended this post to provide a comprehensive roundup of the impact on proxy season, with prior updates integrated for each market.
On March 30, the Brazilian government approved a provisional measure (MP 931) that will allow public companies to: (i) hold their annual shareholders’ meetings up to seven months after the end of their fiscal year when this is between December 31, 2019 and March 31, 2020, (ii) extend the terms of office of the board directors, executives, members of the supervisory council and committees until the shareholders’ meeting is held (iii) decide by the board of directors ad referendum on urgent matters that generally fall under the scope of the shareholders’ meeting, (iv) declare dividends until the shareholders’ meeting is held.
This provisional measure also establishes a provision stating that shareholders will be able to participate and vote remotely, although the meeting will have to be held, preferably in the building where the company has its registered office.
The Brazilian securities commission will exceptionally be able to extend the deadlines established by the Brazilian Corporate Law 6,404/76.
On March 20, 2020, the Canadian Securities Administrators (CSA) published guidance to assist companies in relation to conducting AGMs, stating that in its view issuers can amend the details of the meeting if they promptly file a news release and take all reasonable steps to inform shareholders and provided companies include clear directions on the logistical details of a virtual or hybrid AGM.
On the same day, Canadian banks and life insurance companies announced in a joint press release that they had obtained a court order to hold meetings, in whole or in part, using electronic means. The order was obtained because Canadian banks and insurance companies are not permitted to conduct an electronic annual meeting in lieu of an in-person meeting without relief from the court.
The initial trickle of virtual-only meeting announcements that started last week is turning into a flood of such announcements, with well over 50 public companies making the last minute switch since the beginning of last week.
The Toronto Stock Exchange (“TSX”), owned by TMX Group, has advised that it continues to operate normally. On March 16, 2020 the Canadian Securities Administrators (“CSA”), the informal umbrella organization comprising all of the major provincial securities regulators, updated on potential filing delays by reporting issuers, stating:
“Issuers that foresee not being able to file their annual or interim financial statements by their prescribed deadline because of the current COVID-19 outbreak should consider applying for a management cease-trade order (MCTO)…The CSA is continuing to monitor the impact of COVID-19 on Canadian capital markets and may issue further guidance in due course.”
As such, there does not appear to be additional market-wide relief for Canadian issuers at this stage, with the most common course of action taken likely to be for companies to take their AGM virtual.
Although virtual-only meetings had not previously been used as much in Canada as in the U.S., they are permitted and appear to be getting more popular. Since Friday March 13, a total of seventeen Toronto Stock Exchange (“TSX”) and TSX Venture issuers announced the switch from a physical to an online meeting, with more sure to follow in the coming days.
The Chilean securities commission is implementing measures so that shareholders’ meetings can be held remotely and will even allow companies to present reasons of force majeure of why the meeting may not be held at all.
The Securities and Exchange Commission (“SEC”) has provided as guidance to allow flexibility in how meetings are held, including to facilitate virtual-only meetings, and promote shareholder engagement; as well as additional relief targeted at investment funds and advisers that removes certain filing and in-person voting requirements. We expect many U.S. companies and fund to adopt hybrid or virtual-only meetings for the 2020 proxy season.
Under the SEC guidance, affected issuers can announce changes to their meetings within regulatory filings without having to physically mail the additional proxy materials. The SEC also addresses the impact on shareholder activism, encouraging “companies to provide shareholder proponents with alternative means, such as by telephone, to present their proposals.”
U.S. issuers are taking a variety of approaches, from waiting it out — Agilent convened and immediately adjourned its March 18 meeting, which will now take place April 17 – to making a last-minute switch to a virtual-only format. Some, such as Wells Fargo, are still planning to conduct a physical meeting, but have included a provisional virtual meeting link in their proxy statement as a backup. In addition, some of the companies that are electing to go ahead with their physical meetings are doing so on a streamlined basis. For example, Farmers & Merchants Bancorp has removed presentations and refreshments from the agenda and is strongly discouraging shareholders from attending the meeting, which is intended to last no more than 15 minutes (subject to questions).
The SEC initially issued “conditional” regulatory relief, providing companies impacted by the virus up to 45 extra days to file disclosures due between March 1 and April 30, including quarterly reports. Issuers who delay their disclosures must provide “a summary of why the relief is needed in their particular circumstances.” Many companies have already submitted petitions.
Additionally, the SEC’s Division of Investment Management as announced that it will not pursue enforcement action against fund boards that do not adhere to in-person voting requirements at upcoming meetings due to emergency circumstances; this position was subsequently extended to cover public accountant appointments, as well as other contractual approvals.
Europe & MEA
In Austria, events of over 100 people have been banned. Companies are discouraging physical attendance. Palfinger AG’s AGM has already been cancelled. The best guess right now is that some companies might have to cancel on the day if too many people attend, although the height of the AGM season is still some way out.
To date, meetings for Danske Bank and Nilfisk have been postponed. Remote voting is fairly common in Denmark, and there do not appear to be any rules or requirements that would preclude holding a virtual-only meeting; we expect that some companies may attempt to take this approach.
European Central Bank
The European Central Bank (“ECB”) has recommended banks not to distribute dividends until October in light of COVID. The recommendation is not retroactive for proposals already approved, but “banks that have asked their shareholders to vote on a dividend distribution proposal in their upcoming General Shareholders Meeting will be expected to amend such proposals in line with the updated recommendation.”
All gatherings over 10 people are currently banned, and there is a requirement for all votes to be cast in-person by a representative. As such, virtual-only meetings do not appear to be practicable, and it seems most likely that all meetings that have not yet occurred will be postponed until later in the year.
On March 25, 2020, the French government issued a law 2020-321 on adapting the rules for the meetings of legal persons due to covid-19. The ruling states that where a large gatherings are limited or prohibited for health reasons, listed companies may decide to hold their meeting without any members being physically present. In this case, members may participate and vote through other available methods.
Without the need to change their bylaws, companies may decide that people that are connected through conference call are deemed present for the calculation of the quorum. These rules are applicable for AGMs held between March 12, 2020 and July 31, 2020; or, in case of extension, until no later than November 30, 2020.
Also on March 25, the French government issued law 2020-318 on adapting the rules regarding the audit, review, approval and publication of the accounts and other documents for the AGMS, required to be filed or published in the context of the covid-19 epidemic.
Under this law, AGMs may be postponed up to three months after the legal deadline, which is normally six months from the end of the fiscal year for listed companies in France. Furthermore, the French government will allow a three-month extension for the management board to present the annual accounts to the supervisory board; however, for companies with one-tiered governance structure and with more than 300 employees and a net turnover equal to €18 million, their boards of directors will have only a two-month extension.
In addition, on March 27, 2020, the AMF, the French market regulator drew shareholders’ attention to the exceptional terms of participation at 2020 general meetings. It reiterated that an exclusively remote vote – by proxy or by post – is available in case AGMs will take place behind close doors. In addition, AMF also reminded issuers to livestream their AGMs, if possible, and to give the option to their shareholders to ask questions, either orally or by e-mail. AMF also noted shareholders that some listed companies decided to postpone their AGMs, which was possible thanks to the exceptionally updated regulation.
On March 6, the AMF, the French market regulator, reminded shareholders of listed companies that they can vote at general meetings without being physically present – by post or by proxy, following the evolving context of the coronavirus epidemic and the restrictions on public gatherings.
In order to encourage remote voting in this context of health crisis, the AMF recommends that listed issuers broadcast their general meeting directly on their website and communicate widely on this subject.
Although there have been rumours about the possibility of passing a bill which would allow AGMs to be held behind closed doors, the French Ministry of the Economy and Finance seems to not favour this legislative solution, because it is unlikely than such a bill will pass through the council of state, parliament and potentially the constitutional council in time to have the desired effect on the AGM season.
On March 27, a law passed pursuant to which companies will be able to hold virtual general meetings, even without a stipulation in a company’s articles of association. In addition, the days until when a company has to call a meeting would be reduced from 30 days to 21 days. Further, interim dividend payments would be facilitated.
And, finally, the period until when a company has to hold its annual general meeting would be extended from 8 months after fiscal year end to “until fiscal year end”.
On March 23, the German Ministry of Justice proposed a draft resolution to the federal cabinet pursuant to which:
- companies (under all relevant incorporation forms for GL) would be able to hold virtual general meetings, even without a stipulation in a company’s articles of association;
- the days until when a company has to call a meeting would be reduced from 30 days to 21 days;
- advanced dividend payments would be facilitated; and
- the period until when a Company has to hold its annual general meeting would be extended from 8 months after fiscal year end to “until fiscal year end”.
The draft will be presented and voted on by the Bundestag (“parliament”) on Wednesday, March 25.
A handful of meetings have already postponed, including some large ones: Daimler, Merck, Continental, and Deutsche Telekom. In Germany, companies have to hold their annual meetings in the first eight months of the fiscal year. No exceptions granted at this stage. Health Secretary Jens Spahn recommended against events of more than 1,000 participants. Stricter regulations are being contemplated at state (Bundesland)-level. Voting is nevertheless possible by post, electronically, or through the independent proxy; electronic voting is often possible right up until the start of the meeting. In the AGM invitations, most companies are advising their shareholders to stay home and vote in this manner.
Magyar Telekom has announced the cancellation of its AGM, which had been scheduled for 9 April.
The Israel Securities Authority (“ISA”) has announced reporting reliefs and regulatory assistance for public companies, most notably extending the deadline for reporting 2019 financial statements from March 31, 2020 to April 30, 2020, subject to companies announcing to the stock market their intention to make use of the later reporting date as soon as a decision is taken and no later than March 31, 2020.Further, the ISA clarified that from its perspective there is no legal obstacle under Securities Law or Companies Law to companies holding their shareholder meetings solely by electronic means, provided that all participants can hear one another simultaneously. General meeting votes in Israel are in any case typically carried out by ballot or electronic voting, with crowded physical meetings less common.A full statement from the ISA chair and summary of the actions taken is provided in English here.
A decree was issued by the Italian government on 3/17/2020. Art. 106 covers norms to be applied to all general meetings called until July 31, 2020 (or subsequent date, if the status of emergency was to be extended afterwards), providing for:
- the possibility to call ordinary meetings within 180 days from end-date of the previous fiscal year (120 days under previous provisions, unless specific instances occurred);
- with the notice of meeting, companies can establish proxy voting, postal voting or participation through telecommunication means, even in absence of such provisions in the bylaws; or call a virtual only meeting, as long as participants, their ownership and their vote can be clearly recorded and identified, and with no need for the chair of the meeting, the secretary and the notary to be in the same physical location;
- companies can appoint a common representative even in absence of such provisions in the bylaws, and can determine that participation to the meeting can only happen through the common representative.
So far, three companies have postponed their annual meetings to a later date (Poste Italiane, Banca Monte dei Paschi di Siena, Immobiliare Grande Distribuzione). Moncler has cancelled the special meeting scheduled for March 16, 2020, but has called the ordinary meeting for April 22, 2020. Since the decree was issued yesterday, we would expect to see its impact in the coming days/weeks.
Most companies in the Netherlands are discouraging their investors from physical attendance at AGMs; postal, electronic, and proxy votes are possible. Sligro Food Group NV has already cancelled its AGM.
The Capital Markets Authority has asked all companies and investment funds to suspend their general meetings for the time being.
Adopted March 18, 2020, Federal Law 50 temporarily lifted certain meeting requirements, including specific agenda items (i.e. EOD, election of audit commission, appointment of auditor, approval of accounts and reports etc.) to be held in absentia. The temporary changes apply for FY 2020.
In Spain only one meeting has been postponed so far: Naturgy, whose AGM normally has a large physical attendance of retail investors. However, only one meeting has been called in last two weeks so companies are waiting to see how things develop. We could see postponements; although AGMs should be held within 6 months of the fiscal year end, they are still valid even if held after. The national regulator, CNMV, also allows fully “telematic” meetings. Maximum flexibility is being allowed to adopt measures needed to conduct such a meeting even if they are not expressly provided for in the articles of association.
The Swedish government has banned all meetings of 50 or more people from March 29. No announcement yet for any regulatory changes regarding filings or virtual meetings.
In Switzerland, all public and private events of over 100 people have now been banned until (provisionally) April 19. Some more-affected cantons (e.g. Waadt) have adopted even stronger measures (e.g. Waadt has banned meetings of 10+ people).
As of yet, Swiss companies have not been provided any exceptions from the rule that they must hold their AGMs in the first six months following the end of the fiscal year. A handful of smaller companies have already postponed their meetings. However, a regulation that came into force on March 17 has allowed Swiss companies – irrespective of anticipated attendance numbers – to host annual meetings without in-person attendance, with shareholders only provided the option of voting by post, electronically, or through the company’s independent proxy.
Roche, which is having its meeting today, is already implementing this; voting at this meeting will only be permissible through the independent proxy.
United Kingdom & Ireland
On 26 March, the UK’s Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) released a joint statement confirming that issuers would receive a two-month extension to annual filing requirements, alog with guidance from the FRC for companies preparing financial statements; guidance from the PRA regarding the approach that should be taken by banks and other financial institutions in assessing expected loss provisions under IFRS9; and guidance from the FRC for audit firms seeking to overcome challenges in obtaining audit evidence.
UK companies are being given an automatic two-month extension to file their accounts, and another one-month extension is available in extreme circumstances. Similarly, on March 19 the Irish Registrar of Companies announced an extension on all annual returns filings through 30 June 2020. In addition, the Financial Reporting Council has issued guidance that lays out several options to issuers. These include making adjustments to the standard AGM format, such as dispersing over several venues, integrating an online Q&A and/or livestream, or even adopting a hybrid approach that includes both a physical and electronic meeting; or delaying, postponing or adjourning the meeting.
The hybrid option is only available to companies whose articles of association allow it. In the past year, nearly two dozen FTSE 350 companies have taken this step, most recently Rio Tinto plc—however, we may see companies effectively ratify article amendments to this effect as part of the AGM agenda. Companies who opt to delay their meeting should review the expiry date of existing share issuance, repurchase and other authorities, and the potential impact on dividend payments. For the many UK companies that were due to submit their remuneration policy for binding approval, the existing policy would remain in effect, and the company would have until the end of the current financial year to approve a new policy.
In line with the FRC guidance, Wynnstay Group plc announced that its 24 March AGM would be made available via webcast, external physical guests strictly limited, and the agenda condensed to only consider ordinary and special business, with no management presentation.
Australia & Asia Pacific
ASIC has issued a statement addressing the difficulty in hosting AGM’s during the COVID-19 pandemic. ASIC noted that this issue was immediately pressing for listed and unlisted public companies with December, 31 balance dates, which ordinarily would be required to hold AGM’s by May 31, 2020. Given social distancing is being encouraged, ASIC has confirmed that it will take no action if AGMs are postponed for two months i.e. until the end of July. ASIC also clarified that it considers the Corporations Act allows for ‘hybrid’ AGM’s (where there is a physical location and online facilities), however did not provide a position on the Corporations Act allowing for virtual only meetings. Nonetheless, ASIC has clarified that it intends to take a no action position on non-compliance with provisions of the Corporations Act that may restrict virtual AGMs where an entity elects to hold such a virtual AGM in order to comply with the May 31 deadlines. This position is conditional on the technology used allowing for reasonable opportunity for members as a whole to participate.
The Shenzhen (“SZSE”) and Shanghai (“SSE”) Stock Exchanges have taken a number of steps in response to the outbreak.They are extending the reporting period for annual results from March 30, 2020 to April 30, 2020; waiving initial an annual listing fees for issuers registered in Hubei province; and encouraging companies to hold their meetings electronically. As of February 16, 2020, the SSE had arranged for more than 70 companies to delay their annual report disclosure. Additionally, in an effort to mollify the economic impact of the virus on the Chinese markets, the China Securities Regulatory Commission (“CSRC”) revised its rules (PDF) on Seasoned Equity Offerings (“SEO”) to allow for a greater discount on offering prices (80% of benchmark price, compared to 90% previously). Moreover, the upper limit of investors for each SEO has been increased to no more than 35 from 10, while the cap of the issuance size has been increased to 30% of the total share outstanding before the issuance.
In Hong Kong, where issuers are required to file their annual results by March 31, the Hong Kong Business Accountants Association has petitioned the stock exchange to grant an extension to the reporting deadline. While the Stock Exchange of Hong Kong (the “Exchange”) is permitting companies to issue unaudited results while suggesting views of issuers’ audit committee on the unaudited results shall be considered by the investing public. While companies may continue to trade on a case-by-case basis, a blanket extension has yet to be provided.
On March 16 the Stock Exchange of Hong Kong released further guidance for companies with financial years ending December 31, 2019. The guidance includes permission for issuers to defer the publication of their annual reports by up to 60 days from March 16, provided they meet criteria. Issuers seeking to defer the publication of their annual report will need to announce the expected publication date, and any other updates as appropriate.
The Financial Services Authority of Indonesia (“OJK”) on Wednesday, March 18, 2020 had extended the deadline for reporting and holding a General Meeting of Shareholders (GMS) for Capital Market Industry participants in a response to the emergency conditions due to the Corona virus in Indonesia.
The provision for extension can be summarized as follows:
- The implementation of the Annual General Meeting of Shareholders, which was supposed to be held no later than June 30,2020, was extended to August 31, 2020;
- Submission of the Annual Financial Statements have been changed from March 30,2020 to May 31, 2020; and
- Submission of the Annual Report was extended from no later than April 30, 2020 to June 30, 2020.
Additionally, Company are encouraged to hold GMS through electronic authorization mechanism using the e-GMS system provided by the Depository and Settlement Institution. The holding and use of the Electronic Proxy mechanism for the GMS through the E-GMS system will be as prepared by PT KSEI (“PT Kustodian Sentral Efek Indonesia”). With Electronic Proxy, it is expected that the shareholders do not need to be present (avoiding the crowd) and are sufficiently represented by the proxy.
On March 17, Bursa Malaysia Securities Berhad announced measures permitting listed companies to apply to delay their AGMs more than six months after the financial year end. Similarly, listed Real Estate Investment Trusts (“REITs”) have been granted a two-month extension to hold their AGM, giving most REITs until the end of June. In addition, it has been reported that AGMs may be held electronically, which is permitted under the Companies Act 2016.
The Securities and Exchange Commission Philippines (“SECP”) has announced the ability for companies to extend their filing annual filing period, including annual reports and audited financial statements up to June 30, 2020. The extension is mainly meant for companies with overseas operations impacted by the COVID-19 outbreak, although domestic companies can also seek an extension. The SECP also announced the rules and procedures for companies to hold general meetings electronically.
The Singapore Exchange Regulation (SGX RegCo) released a new announcement on March 31, whereby companies may hold their AGM before April 30, provided there are opportunities for shareholders to ask questions and that the meeting be shown by a “live” webcast and that the meeting allow for proxy voting. The statement follows a statement from March 25 on the guidance on safe distancing measures. Yet, the March 31 guidance includes an annex whereby gatherings of more than 10 people have been prohibited from March 27, per the Infectious Diseases (Measures to Prevent Spread of COVID-19) Regulations 2020. In light of changes to Ministry of Health Regulations, the Finance Ministry is working to submit new regulations to Singapore’s parliament for its next sitting on April 7, on the holding of meetings. The draft regulations may include virtual meetings and e-voting, if not a strengthened provision for voting via a proxy. With all the changes, SGX RegCo is strongly encouraging companies to release their notices of meeting at least 21 days in advance of a general meeting, while the normal minimum disclosure time is 14 days.
On March 19, SGX RegCo issued new guidance on the holding of general meetings amid the COVID-19 outbreak. Notably, the guidance includes the ability for companies to webcast their general meetings, particularly as guidance would limit the number of people attending a general meeting at 250 people. Similarly, venues for general meetings would need to be set up in order to promote and maintain social distancing. Where companies seek to webcast their general meeting, arrangements must be made to allow shareholders to pose questions. As for voting, shareholders are encouraged to vote by proxy, while SGX RegCo is looking to work with companies to adopt further digital tools for the conducting of general meetings.
In February, the Singapore Exchange Regulation (“SGX RegCo”) decided to provide issuers with a two-month extension to hold annual shareholder meetings to approve fiscal year 2019 results, due to feedback expressed by shareholders that are concerned about attending large-group meetings. This extends a waiver that was granted earlier in the month by SGX RegCo to Singapore-listed companies with their principal place of business in China, which had been put in place following concerns raised by audit professionals on the practical difficulties of conducting their work. Should a company seek to extend its annual shareholder meeting from April up until the end of June, they still must submit their annual reports by April 15. The issue is particularly relevant given that Singapore does not allow for e-voting or remote participation in annual shareholder meetings.
In South Korea, the Financial Services Commission (FSC) announced measures to allow companies to delay the submission of their audited financial statements and annual reports. The delay would primarily apply to companies with main operations (including subsidiaries) in China or domestic areas of South Korea designated as “COVID-19 affected areas”. Likewise, companies can seek a delay if their auditor was impacted by the outbreak or because of disinfection measures. According to the Korean version of the FSC’s announcement, companies that request a delay will not be subject to fines of not having financial statements at their annual shareholder meeting, but must re-hold their meeting after April. Further, the FSC is encouraging voters to use postal voting and electronic voting systems rather than attending in person.
Thailand’s Securities and Exchange Commission announced on February 21, 2020, that companies could seek a delay in submitting their financial statements. In addition, a request for delay can be sought if a company’s operations or the travel plans of board of directors has been impacted by the COVID-19 outbreak to the point that the board is unable to hold a meeting to approve its financial statements.
Companies are currently delaying their AGMs, which the peak time for meetings is usually in April. Media reporting indicates that AGM extensions could be upward of two months to the end of June, while other reports note that companies may have had the ability to host virtual meetings, but not all investors may be able to participate in the meetings.
Note: Chris Rushton, Jeff Jackson and Marie Romer contributed to this report.