COVID and Corporations: What's changed?
The Pandemic has affected all of us in many areas of our lives, and the businesses are not exempt from these changes.
Although the Minister of Innovation, Science and Industry in Ontario issued an order to extend the deadline for calling Annual General Meetings ("AGM") and presenting financial statements, the normal rules have now applied since January 1, 2021. What this means is that federally incorporated businesses, not-for-profits and cooperatives are to hold an AGM for shareholders or members every year, as stated by law. This has to be done within 15 months of the previous AGM and no more than six months after the last financial year-end.
Due to the public health measures put in place to reduce the spread of the COVID-19 virus, having a physical AGM is highly unlikely in the next coming months. In this blog post, we discuss the three options the Government of Canada has put in place for corporations to still hold their AGM pursuant to their obligations under the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act and the Canada Cooperatives Act, as applicable.
These options are as follows:
1) Virtual Meeting:
By now, a large percentage of the work population is familiar with virtual meetings, through channels such as Zoom, Google Meet, Webex and other virtual meeting platforms. However, before a corporation can adopt this method to host their AGM, it needs to be stated in the corporation’s by-laws. Once the corporation’s by-laws provide for the right to hold meetings virtually, then participants can freely host their AGM online and vote digitally. However, if the by-laws do not expressly permit virtual meetings, some participants could attend the meeting in-person while others connect digitally. The best bet, however, is for the corporation to amend its by-laws to accommodate virtual meetings. The Government of Canada speaks more in-depth about this option in this article.
2) Replace the in-person meeting with a resolution in lieu of the AGM
This is an option that can work effectively for small corporations, not-for-profits and cooperatives where the shareholders or members would just have to approve business items that are to be discussed at an AGM and then sign the written resolution. The items to be included should cover vital matters such as:
Appointing an auditor, public accountant or waiving such appointment; and
The corporation’s financial statement.
Once this resolution is signed, it would be kept in the company’s official records.
3) Delay the AGM
The third option would be for the business entity to delay the AGM. For a not-for-profit, it is relatively easy to do as they would have to apply online by following this link or by email to IC.corporationscanada.IC@canada.ca, at least 30 business days before the notice calling the meeting is to be sent to members. More information is available on this link.
For federally incorporated businesses and cooperatives however, such organizations would have to obtain court approval before they can delay an AGM.
It is encouraging to know that flexible measures are being put in place to help businesses continue their operations as normally as possible. It is hoped that very soon, in-person Annual General Meetings will be a possibility again.
If you have any questions about the changes COVID has caused to your business and how you can adapt, please do not hesitate to book a free consultation available on this link. You can also contact us at 416-639-7639 for any questions or advice on helping your business operate as hitch-free as possible and still achieving your business goals.