The order issued by the Minister of Innovation, Science and Industry extending the deadline for calling the annual general meetings (AGM) and presenting financial statements has ended. It applied beginning March 13, 2020 to December 31, 2020. As of January 1, 2021, the normal rules apply for calling an AGM and presenting financial statements.
By law, federally incorporated businesses, not-for-profits and cooperatives have to hold an annual general meeting of shareholders or members every year. This allows shareholders and members to make governance decisions based on current information and have confidence to continue to support the business, not-for-profit or cooperative.
Federally incorporated businesses, not-for-profits and cooperatives have to call an AGM within 15 months of the previous AGM and no more than six months after the organization's last financial year-end.
We recognize that hosting an in-person AGM during the COVID-19 outbreak would contradict public health advice to practice physical distancing and self-isolation to prevent the spread of the virus. As it is unsafe to host public gatherings at this time, we have outlined three options for federal corporations to consider in order to remain compliant under the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act and the Canada Cooperatives Act.
1. Hold a virtual meeting
Some corporations have the right to hold meetings virtually using digital technologies. To see if this is a valid option, check the corporation's by-laws to make sure there are no restrictions on participation in meetings by digital means.
Depending on the by-laws, a corporation could have two possibilities:
- Virtual meeting — Participants attend exclusively through a digital channel that allows participants to communicate adequately with each other during the meeting. Virtual meetings must specifically be in the corporation's by-laws.
- Partially virtual meeting — Some participants attend in-person and others participate through a digital channel that allows participants to communicate adequately with each other during the meeting. A partially virtual meeting may be a viable alternative if the by-laws do not permit virtual meetings.
Under both possibilities, participants can vote digitally as long as:
- it is not prohibited by the corporation's by-laws
- it complies with regulations. This means that the corporation gathers votes in a way that allows them to be verified, tallied and presented while maintaining votes anonymous.
If the corporation's by-laws prohibit virtual meetings or are silent on holding them, the board of directors may change the by-laws with the change effective until the next meeting of shareholders or members (when the change can be confirmed or rejected).
2. Replace the in-person meeting with a resolution in lieu of the annual general meeting
For corporations, not-for-profits and cooperatives with a small number of shareholders or members, a practical alternative to an in-person meeting is to have all shareholders or members approve business items that are to be dealt with at an annual general meeting. At a minimum, these items must include:
- electing directors
- considering the corporation's financial statements
- appointing an auditor or public accountant or waiving the appointment of an auditor or public accountant.
All shareholders or members who are entitled to vote at the corporation's AGM must sign the written resolution. Once signed, keep the resolution in your corporation's records.
3. Delay calling the annual general meeting
Not-for-profit corporations can apply to delay the calling of their AGM when it would be detrimental to call the meeting within the normal timeframe. Not-for-profits have to apply, either online or by email at firstname.lastname@example.org, at least 30 business days before the notice calling the meeting is to be sent to members. More information is available by consulting Extending the time for calling an annual meeting of members.
To delay an AGM, federally incorporated businesses and cooperatives need court approval.
If you have any questions, please contact us.
Canada Business Corporations Act, subsections 132(4), 132(5) and 133(3)
Canada Not-for-profit Corporations Act, subsections 159(4), 159(5) and 160(2)
Canada Cooperatives Act, subsections 48(3), 48(3.1) and 50(3)