The SEC announced on March 13th that its staff has published guidance to assist public companies, investment companies, shareholders, and other market participants affected by COVID-19 with their upcoming annual shareholder meetings. This guidance is designed to facilitate the ability of companies to hold these important meetings and engage with shareholders while complying with the federal securities laws and maintaining social distancing. Many public companies and investment companies are mandated to hold annual meetings of security holders, and federal securities laws require the delivery of proxy materials to the voting shareholders. COVID-19 and its continuing spread has impacted the ability to hold these in-person meetings due to health, transportation, and other logistical issues.
The SEC staff stands ready to facilitate transitions to teleconferencing and other online, electronic methods of communicating and encourages market participants to contact them with requests for guidance or relief. The SEC has itself shifted to teleworking and virtual meetings and remains fully operational. In light of recent difficulties, SEC staff guidance also provides regulatory flexibility to companies seeking to change the date and location of the meetings and use new technologies, including “virtual” shareholder meetings that avoid the need for in-person shareholder attendance, while at the same time ensuring that shareholders and other market participants are informed of any changes.
Under the guidance, the affected parties can announce in filings made with the SEC the changes in the meeting date or location or the use of “virtual” meetings without incurring the cost of additional physical mailing of proxy materials. Companies must do the following:
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
In addition, the guidance encourages companies to provide shareholder proponents with alternative means to present their proposals at the annual meetings.
The SEC will continue to closely monitor the impact of COVID-19 on investors and the capital markets. Again, companies, shareholders, and other market participants are encouraged to contact SEC staff with any questions and concerns.