In Delaware, Governor John C. Carney issued a Declaration of State of Emergency in connection with the ongoing coronavirus pandemic. This month, the Declaration was modified (the Tenth Modification) to address the numerous shareholder meetings to be noticed for Delaware companies. The Tenth Modification, acknowledging that physical gatherings are explicitly discouraged, advise that shareholder meetings be held remotely for the “safety, health and wellbeing of participants”.
Corporations are permitted to adjourn their physical meetings or move to a remote format, provided that certain steps are taken if the date and/or “location” (yes, virtual) are being changed. Pursuant to § 232 of Title 8 of the Delaware Code, notice of stockholder meetings is usually given through mail, courier service, or email – but the Securities and Exchange Commission is currently allowing companies to provide certain notices via required public filings and press releases. Consequently, to effectuate the change of an annual meeting to a remote format, Delaware corporations should file this notice with the SEC and issue a press release on their websites immediately afterwards.
Although Delaware law already does generally provide that corporations are allowed to hold stockholder meetings remotely, these provisions (e.g. the board of directors has the discretion to decide upon a remote meeting) must be in the corporation’s organizational documents. Consequently, the Tenth Amendment contains crucial provisions for those corporations whose organizational documents may not have been as explicit on these issues. The other provisions of 8 Del. C. § 211, such as the “reasonable measures” to verify the presence and participation of stockholders/proxyholders, as well as record-keeping, have not been changed by the Tenth Amendment.