ISS Surveys Regulatory Landscape of Annual Meetings and Covid-19

In response to the COVID-19 pandemic, securities regulators in several countries have published guidance that affords publicly listed companies greater flexibility regarding the type of annual general meeting (AGM) they can hold as well as when it can be held.

As of March 31, the total number of meetings postponed or cancelled globally because of COVID-19 was approximately 557 while the number of meetings that will be virtual-only or proxy-only stood at 560. By comparison, that number stood at 286 for all of calendar 2019. These figures, as tracked by ISS and as illustrated below, are changing by the day as the pandemic is pushing into the traditional AGM season for many markets in the northern hemisphere.

Figure 1: Count of Virtual Meetings by Market as a Result of the Pandemic

Source: Institutional Shareholder Services; as of March 31, 2020; data is compiled based on alerts issued due to COVID-19 as disclosed by companies after the meetings had entered the ISS Global Meeting Services queue.; includes extraordinary and non-equity meetings. Does not necessarily include all meetings that have been announced as virtual in a market.

Similarly, regulatory agencies across varied jurisdictions are providing frequent updates to their policies on meetings and public reporting. Given the rapid pace of change, there is considerable disruption to the typical corporate reporting period and the AGM calendar.

Figure 2: Count of Adjourned/Cancelled Meetings by Market as a Result of the Pandemic

Source: Institutional Shareholder Services; as of March 31, 2020; data is compiled based on alerts issued due to COVID-19 as disclosed by companies after the meetings had entered the ISS Global Meeting Services queue.; includes extraordinary and non-equity meetings. Does not necessarily include all meetings that have been announced as postponed in a market.

This is a fast-changing area with new regulatory and other guidance coming out frequently at present regarding the hosting of AGMs and public reporting requirements. In most U.S. states, companies are generally able to hold either hybrid or virtual-only meetings without seeking shareholder approval. The SEC issued guidance on March 13, providing regulatory flexibility to companies that wish to change the date or location of their shareholder meeting or switch from an in-person meeting to a virtual meeting because of COVID-19.

Some companies may choose to take measures such as postponing their AGM, changing the format from a physical (in person) to a virtual meeting, or simply changing to another physical location to minimize public health concerns. Many companies shifted to online-only meetings after the SEC offered exemptions following a shareholder request.

The SEC staff is also encouraging companies to allow shareholder proponents or their representatives to present their proposals by telephone and not insist that they attend in person.

Companies that seek to make the change after their proxy materials have already been filed and mailed will not be required to amend their proxy statement or mail additional material to shareholders, provided that such companies issue a press release announcing the change, file it on EDGAR, and “take all reasonable steps necessary to inform other intermediaries in the proxy process and other relevant market participants of such change.”

Separately, the SEC has also provided publicly traded companies with a 45-day extension to file certain disclosure documents, including annual and quarterly reports. Such reports would otherwise have been due between March 1 and July 1, 2020. Companies must, among other conditions, explain through a current filing why the relief is needed in their particular circumstances.

Additionally, publicly traded companies may be exempt from providing hard copies of proxy statements and annual reports if the shareholder has a mailing address located in an area where mail delivery has been suspended as a result of COVID-19.

On March 23 the SEC announced temporary flexibility for registered funds affected by recent market events to borrow funds from certain affiliates and to enter into certain other lending arrangements. The relief is designed to provide funds with additional tools to manage their portfolios for the benefit of all shareholders as investors may seek to rebalance their investments.

The SEC also issued orders that would provide certain investment funds and investment advisers with additional time with respect to holding in-person board meetings and meeting particular filing and delivery requirements, as applicable.

Access an overview of regulatory updates in select countries regarding the hosting of AGMs and public reporting requirements as of March 31, 2020, here.

This post comes to us from Institutional Shareholder Services. It is based on the firm’s memorandum, “Annual General Meetings and Covid-19: A Review of the Regulatory Landscape,” dated April 2, 2020.