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COVID-19 Update: SEC Guidance on Shareholder Meetings and Filing Deadline Extensions in Light of COVID-19 Concerns

In light of the recent COVID-19 global outbreak, on March 13, 2020, the Securities and Exchange Commission provided guidance to assist issuers, shareholders and other market participants affected by COVID-19 with meeting their obligations under the federal proxy rules.  Additionally, on March 4, 2020, the SEC issued an order that, subject to certain conditions, provides publicly traded companies with an additional 45 days to file certain disclosure reports that otherwise would have been due between March 1 and April 30, 2020.

Changing the Shareholder Meeting

The SEC recognizes that issuers are contemplating possible changes in the date, time or location of their annual shareholder meetings because of COVID-19 concerns.  The SEC’s guidance provides that, subject to the conditions described below, an issuer that has already filed and mailed its definitive proxy materials can notify shareholders of the change of its shareholder meeting without amending its proxy materials (and subsequently filing such amended materials on EDGAR and also posting them to a publicly-accessible, non-EDGAR website), as is generally required under Rule 14a-6(h) of the Securities Exchange Act of 1934.  Specifically, the issuer must: (1) issue a press release announcing such change to their annual shareholder meeting; (2) file such announcement as definitive additional soliciting material on EDGAR; and (3) take all reasonable steps necessary to inform other intermediaries in the proxy process and other relevant market participants of such change.  The SEC encourages those issuers that have not yet mailed and filed their definitive proxy materials to consider whether to include disclosures regarding the possibility that the date, time or location of the annual meeting will change because of COVID-19.

“Virtual” Shareholder Meeting

Because the spread of COVID-19 has affected the ability to hold in-person meetings due to health and transportation issues, many issuers are contemplating conducting a “virtual” shareholder meeting in lieu of an in-person meeting.1

An issuer’s ability to hold a “virtual” shareholder meeting depends on its governing documents and the laws of the state in which the issuer is incorporated.  For example, under Delaware law, if an issuer’s organizational documents do not require holding the annual meeting at a physical location, the issuer’s annual meeting can be held “virtually.”2  If the issuer has time to give its stockholders at least ten days’ notice of the new “virtual” meeting, the issuer should distribute a new notice to its stockholders by physical mail or e-mail.3  The new notice should include, among other information, the time and date of the “virtual” meeting, as well as instructions on how to join the meeting and the means by which stockholders may be deemed present in person and vote at such “virtual” meeting.  On the other hand, if the issuer has fewer than ten days to notify its stockholders of the “virtual” meeting, the issuer could adjourn the meeting to a “virtual” location, since notice of an adjourned annual meeting ordinarily is not required.4

The SEC urges those issuers planning to conduct a “virtual” shareholder meeting to notify its shareholders and other market participants of such plans in a timely manner and disclose clear directions with respect to the logistical details of such meeting.  Specifically, the SEC’s guidance provides that those issuers that have not yet filed their definitive proxy materials should include such disclosure in their definitive proxy statement and other soliciting materials.  Those issuers that have already filed their definitive proxy materials would not need to amend such materials if they satisfy the same conditions for announcing a change in the meeting date, time or location, as discussed above.

For issuers facing a contested shareholder meeting, the use of a “virtual” meeting raises additional issues that would need to be considered by issuers and their advisors, including the process for matters to be presented by shareholders, the ability of shareholders making proposals to speak at the meeting, the timing and mechanics for voting at the “virtual” meeting (including via a legal proxy) and the process for any challenges initiated by a shareholder.  In addition, issuers will need to confirm with their “virtual” meeting service providers whether they can provide “virtual” meetings for contested solicitations.  Issuers may want to consider permitting the proponents of contested matters and their advisors to be present in person to make statements as well as to deliver proxies and ballots in order to avoid later challenges over the conduct of the meeting.  Relatedly, because of shareholders’ restricted abilities to attend shareholder meetings in person and the expected increase in the number of “virtual” meetings, the SEC’s guidance encourages issuers to provide shareholder proponents with the ability to present their Rule 14a-8 proposals through alternative means, such as by telephone.

Filing Deadline Extension

The SEC understands that COVID-19 may present challenges to issuers and persons in timely meeting their filing obligations under the federal securities laws.  Many of those affected “may include U.S. companies with significant operations in the affected areas, as well as companies located in those regions.”5  The SEC order provides that, subject to certain conditions, any registrant or person required to make filings under certain sections, rules and regulations of the Securities Exchange Act of 19346 may be afforded an additional 45 days to file such reports (had such reports otherwise been due between March 1 and April 30, 2020).  In order to take advantage of this deadline extension, the filer must satisfy the following conditions:

  • The filer is unable to meet the filing deadline because of circumstances related to COVID-19;

  • Any registrant relying on the SEC order furnishes to the SEC a Form 8-K (or Form 6-K, if applicable) by the later of March 16, 2020 or the original filing deadline stating:

    • that it is relying on the SEC order;

    • a description of the reasons why it could not file such report on time;7

    • the estimated date by which the report is expected to be filed;

    • if appropriate, a risk factor explaining, if material, the impact of COVID-19 on its business; and

    • if the reason the report cannot be filed timely relates to the inability of any person to furnish any required opinion, report or certification, the Form 8-K (or Form 6-K) shall attach as an exhibit a statement signed by such person stating the reasons why such person cannot furnish the documentation on or before the original deadline.

  • The filer files the report with the SEC no later than 45 days after the original deadline; and

  • The filer discloses on such report that it is relying on the SEC order and states the reasons why it could not file such report on a timely basis.

Additionally, the SEC order exempts registrants and persons from furnishing proxy statements, annual reports, information statements and other soliciting materials to shareholders who have a mailing address located in an area where, as a result of COVID-19, the common carrier has suspended delivery service of the type used by the registrant making the solicitation.


1     Starbucks Corporation held a “virtual-only” annual shareholder meeting on March 18, 2020.

2     See Delaware General Corporation Law § 211(a)(1).

3     See Delaware General Corporation Law § 222(b).

4     See Delaware General Corporation Law § 222(c).

5     Securities Exchange Act Release No. 34-88318 (March 4, 2020).

6     Securities Exchange Act Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f) and 15(d); Securities Exchange Act Regulations 13A, 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D; and Securities Exchange Act Rules 13f-1 and 14f-1.

7     As of March 17, 2020, 20 companies had taken advantage of the 45-day extension afforded by the SEC order.  A majority of the reasons why these companies could not timely file their reports are travel-related and logistical (e.g., delays in on-site audits, closures of offices by local order, inability to access physical documents, travel restrictions, etc.).

© Copyright 2020 Cadwalader, Wickersham & Taft LLP

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William P. Mills, Partner, Cadwalader law firm
Partner

William Mills represents clients in a wide range of transactions, including mergers and acquisitions, divestitures, public and private securities offerings, shareholder activism, proxy contests, spin-offs, restructurings, leveraged buyouts, tender and exchange offers, and joint ventures. He regularly advises public companies and boards of directors on corporate governance, fiduciary duty and disclosure matters, as well as investment banks as financial advisers on M&A and other transactions.

Bill is co-chair of Cadwalader's Corporate Group and co-chair of the firm's Health Care...

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Gregory Patti Securities Lawyer Cadwalader Law Firm
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Greg Patti represents clients in a wide variety of mergers and acquisitions, securities and corporate governance matters. Greg represents foreign and domestic entities in complex business transactions and counsels clients on negotiated acquisitions, divestitures and private equity transactions.

In addition to his transactional practice, Greg counsels clients on a broad range of business-related matters including securities law, directors’ duties and responsibilities and disclosure matters. Greg has represented public and private acquirors, targets and portfolio companies. He has advised clients on numerous significant matters, particularly in the life sciences and telecom industries.

Greg is a founder of the Shareholder Director Exchange (SDX™), a working group of leading independent directors and representatives from some of the largest and most influential long-term institutional investors. Advised by Cadwalader, the working group created the SDX Protocol as a template to assist U.S. public company boards and institutional investors in addressing corporate governance issues and facilitating direct engagement between institutional investors and boards of directors. 

Greg received his J.D. from Harvard Law School, an M. Phil. in International Relations from the University of Cambridge, and a B.A., magna cum laude, from Yale University.

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Braden McCurrach Corporate Attorney Cadwalader Law Firm
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Braden McCurrach is a partner in Cadwalader’s Corporate Group.  His practice involves counseling clients in a broad range of complex transactional matters, including public and private mergers, acquisitions, divestitures, proxy contests, tender offers, spinoffs and joint ventures. Braden’s practice also includes the representation of investment banks in their capacity as financial advisors on M&A and other transactions.  In addition to his transactional experience, Braden advises clients in a wide array of governance, securities and other commercial matters, including directors’ duties...

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Chelsea Donenfeld, Lawyer, Cadwalader NY,Corporate Law, M&A, Securities law, Shareholder Activism and Defense
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Chelsea Donenfeld is an associate in the Corporate Group of Cadwalader’s New York office. Her practice is concentrated in the area of corporate law, with an emphasis on mergers and acquisitions, securities law, shareholder activism and defense, corporate finance and corporate governance. Chelsea represents clients in a wide range of complex transactional matters, including public and private mergers and acquisitions and securities offerings.

Chelsea received her J.D. from the Benjamin N. Cardozo School of Law, where she was a Senior Articles Editor of the Cardozo Law Review ...

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