The ability of public companies to conduct virtual shareholder meetings has received significant attention in 2020 following the outbreak of the Covid-19 virus that resulted in numerous jurisdictions around the world imposing restrictions that prevent in person meetings and impede travel. Recognizing the uncertainty that these restrictions placed on 2020 annual shareholder meetings, the U.S. Securities and Exchange Commission issued guidance earlier this year allowing public companies to hold annual shareholder meetings “virtually,” so long as it is permitted by a corporation’s governing law and constitutional documents, and to determine whether to hold such meetings virtually or in person even after the dissemination of proxy materials provided that certain conditions were met. Seward & Kissel LLP issued a previous client memorandum on this topic in April of this year.
The ability of Delaware corporations to conduct “virtual” shareholder meetings is expressly set out in the Delaware General Corporations Law, and similar provisions exist in the laws of numerous other United States jurisdictions. While the Business Corporations Act of the Republic of the Marshall Islands (the “BCA”) closely tracts Delaware corporate law in many respects, the BCA does not expressly provide for the conduct of virtual shareholder meetings. In light of the uncertainly resulting from this omission from the BCA, the International Registries Inc., which provides support to the corporate registry of the Marshall Islands, and Seward & Kissel LLP worked together to draft the Shareholder Meeting Regulations, 2020 (the “Regulations”), which came into force on May 8, 2020. The Regulations clarified that, unless otherwise explicitly prohibited by a corporation’s articles of incorporation or bylaws, a Marshall Islands corporation is permitted to conduct shareholder meetings by remote communications. The Regulations expressly state that they do not constitute a substantive change to the BCA, and that shareholder meetings conducted by Marshall Islands corporations by remote communications prior to May 8, 2020 were not prohibited under the BCA.
Pursuant to the Regulations, as an alternative to an entirely in person shareholder meeting with no means of remote communications, the Board of Directors of a Marshall Islands corporation may elect to conduct shareholder meetings entirely by means of remote communications, or may hold in person meetings with the ability of any shareholder or proxyholder to participate by means of remote communications. To the extent that a meeting is held, solely or in part, by means of remote communications, the corporation must provide for the ability of all remotely participating shareholders to be able to vote at the meeting on any matter submitted to shareholders.
If you have any questions about the Regulations, Marshall Islands corporations or any capital markets related issues, please contact your primary relationship attorney at Seward & Kissel LLP.
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