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Remote Shareholders’ Meetings Authorized and Encouraged for North Carolina Corporations in COVID-19 Environment

On April 1, 2020, North Carolina Governor Roy Cooper issued Executive Order No. 125, which permits and encourages corporations incorporated in North Carolina to conduct all or any part of a shareholders’ meeting solely by means of remote communication during the current state of emergency in North Carolina. The Executive Order is effective for 60 days, unless earlier rescinded or replaced, and applies for North Carolina corporations holding, commencing, or sending formal notice to their shareholders of such a meeting during the state of emergency. 

The North Carolina Business Corporation Act currently may be interpreted to require North Carolina corporations to hold shareholders’ meetings at a physical location. North Carolina corporations have been grappling with this issue in light of COVID-19 and related public health concerns and recommended limits or restrictions on public gatherings.  The Executive Order provides these corporations with greater certainty by temporarily expressly providing that all or any portion of a shareholders’ meeting may be held solely by means of remote communication.

A North Carolina corporation that chooses to hold a virtual-only shareholders’ meeting pursuant to the Executive Order must, among other things, provide its shareholders the opportunity to participate in, and vote at, the meeting. The Executive Order also permits a corporation that holds a shareholders’ meeting at a physical location to limit the number of in-person attendees in accordance with restrictions on mass gatherings during the state of emergency. Furthermore, the Executive Order clarifies that the “place” of the shareholders’ meeting designated in the notice of meeting includes the method of remote communication through which shareholders may participate in a meeting held solely by means of remote communication. North Carolina corporations should review their governing documents with counsel in connection with a shareholders’ meeting held pursuant to the Executive Order. 

For publicly traded companies, the Executive Order follows recently released guidance by the Securities and Exchange Commission that provides flexibility to those companies seeking to change the date, time or location of their annual meeting of shareholders, or change the format of their annual meeting, without needing to mail additional proxy materials.

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Christopher J. Gyves Corporate and Securities Attorney Womble Bond Dickinson Winston-Salem, NC
Partner

Chris is a seasoned corporate and securities lawyer who helps public companies overcome their most significant legal issues. He is a partner in the Corporate & Securities Practice Group and Chair of the Firm’s Public Company Advisors Team, a multi-office team of corporate, capital markets, and tax attorneys who serve the Firm’s public-company clients.

In the boardroom, Chris counsels boards of directors on leading-edge and highly confidential transactional and governance matters and special committee investigations. He is experienced in public and private mergers and...

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Debbie Harden, Womble Carlyle Law Firm, Business Litigation Attorney
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Debbie has more than 30 years of experience as a business litigator and trusted legal advisor.  In addition to counseling on corporate, governance and fiduciary matters, Debbie has a broad-based litigation practice in state and federal courts including The North Carolina Business Court.  She has been recognized by The Best Lawyers in America© in five litigation categories Commercial Litigation, Litigation – Banking and Finance, Litigation - ERISA, Litigation – Mergers and Acquisitions and Litigation – Trusts and Estates.  Best Lawyers in America© also recognized Debbie as the “2013 Trust and Estates Lawyer of the Year” for Charlotte and the 2014 and 2015 "ERISA Litigation Lawyer of the Year” for Charlotte.   Other recognitions include Chambers USA in Litigation as well as the North Carolina Super Lawyer in Business Litigation and Martindale AV rating.

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Kenneth N. Shelton Private Investment Fund Transaction Attorney Womble Bond Dickinson Research Triangle Park, NC
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Ken has extensive experience in private investment fund transactions, assisting clients with the complex process of forming and investing in funds of all types and related management and governance matters, including those involving real estate, private equity, credit and hedge funds.

Since 2012, he has successfully completed private investment fund transactions totaling over $15 billion dollars. He works with clients on all fund matters, including counseling them on fund organizational and structural issues, negotiating key terms with investors and providing legal advice on all...

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Sudhir Shenry Corporate Attorney Womble Bond
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Sid’s clients operate across the cutting-edge industries that support and power U.S. commerce, including transportation, construction materials, manufacturing, semiconductors, and financial institutions. He is a partner in the Corporate & Securities Group and Co-Chair of the Public Company Advisors Team, and his leadership is part of why clients rely on Sid’s counsel. He focuses his practice on the representation of public companies in securities transactions, including offerings of debt and equity securities, tender offers, and exchange offers, as well as mergers...

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