Although the COVID-19 pandemic persists all across the country, emergency measures in effect from March 13, 2020 to December 31, 2020 permitting federal business and not-for-profit corporations and cooperatives (collectively the "Federal Entities") to extend the deadlines for calling annual general meetings ("AGM") and presenting financial statements expired. As a result, the Federal Entities must once again follow the normal statutory rules, namely:
- holding an AGM once every calendar year and not later than 15 months since the date of the last AGM; and
- presenting at the AGM financial statements for a period starting immediately after the end of the last completed financial year (or the date of incorporation if the entity has not completed and ended not more than six months before the AGM).
Directors of a Federal Entity that do not comply with the time limits for calling or holding an AGM may be subject to various legal sanctions.
Since the COVID-19 pandemic continues unabated and restrictions for gatherings as well physical distancing advisories remain in place, the federal government has outlined three options for Federal Entities to remain compliant with under the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act and the Canada Cooperatives Act with respect to AGMs and the presentation of financial statements:
Holding your AGM virtually, whether wholly or in part, either by audio or video, may be authorized under your Federal Entity's bylaws. If it is not, directors of Federal Entities generally have the authority to amend the bylaws to allow for virtual meetings. Such amendments would remain in effect until the next meeting of shareholders or members, as applicable, at which point the changes may be confirmed or rejected, generally by simple majority (50%+1) of the shareholders or members, as applicable.
Participants in virtual or partially virtual meetings may vote digitally as long as:
- it is not prohibited by the Federal Entity's bylaws;
- the means of communication used allows all participants to communicate adequately with each other; and
- the votes are collected in a way that allows them to be verified, tallied and presented while maintaining the secrecy of the vote.
Written Resolutions in lieu of AGMs
Smaller Federal Entities with fewer shareholders or members, as applicable, may wish to use written resolutions instead of calling AGMs. All shareholders or members, as applicable, who are entitled to vote at the AGM must sign such written resolutions approving the business items that are to be dealt with at the AGM. At a minimum these items include:
- the election of the directors;
- consideration of the Federal Entity's financial statements; and
- the appointment or waiver of appointment of an auditor or public accountant.
Once signed by all shareholders or members, as applicable, entitled to vote, the resolution is as valid as if it has been passed at an annual meeting, thus allowing the Federal Entity to avoid having to actually hold an in-person meeting.
Delay an AGM
Federal not-for-profit corporations may seek permission from Corporations Canada to delay calling their AGMs when it would be detrimental to call the meeting within the normal timeframe. Applications may be made online 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. Corporation Canada will most likely consider there to be little or no prejudice to members in situations where:
- members still have access to the required current information; and
- the not-for profit corporation gives sufficient disclosure to its members of the extension and how it affects their rights under the Canada Not-for-profit Corporations Act;
More information is available by consulting Corporations Canada's webpage: " Extending the time for calling an annual meeting of members".
In any event, Federal business corporations and cooperatives will need to obtain court approval in order to delay an AGM.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.