Delaware Governor Resolves Virtual Annual Meeting Notice Issues
On April 6, Delaware Governor Jay Carney issued an order that effectively resolves a disconnect between the SEC’s prior guidance for public companies who desire to change the date, time or location of a shareholder meeting due to the public health impact of the coronavirus disease (COVID-19) and the Delaware statutory requirements regarding distribution of an updated notice of a shareholder meeting due to such changes. This SEC guidance was generally aimed at public companies moving from a physical, or in-person, annual meeting to a virtual annual meeting.
While the SEC’s guidance provided that public companies would only need to issue a press release announcing such change; file the announcement as definitive additional soliciting material on EDGAR; and take all reasonable steps necessary to inform other intermediaries in the proxy process (such as any proxy service provider) and other relevant market participants (such as the appropriate national securities exchanges) of such change, securities practitioners expressed concern that such actions would not be sufficient to comply with the notice requirements under Delaware law.
Governor Charney’s order addresses this concern by providing, in effect, that if a public company notifies shareholders of a change from a physical annual meeting to a virtual annual meeting by following the guidance issued by the SEC, such action would be sufficient to meet the notice requirements under Delaware law. The order also provides an accommodation for public companies to adjourn a physical annual meeting to a virtual annual meeting by following the same process laid out in the SEC’s guidance.