Canadian Securities Regulators Provide Temporary Relief for Issuers Delaying AGMs Due to COVID-19

Authors: Mahdi Shams, Nathan Cramer

Canadian Securities Administrators introduced temporary blanket relief for public companies from filing and delivery requirements in connection with delayed annual shareholder meetings.

Existing continuous disclosure obligations require Canadian public companies to include certain prescribed information respecting the compensation paid or payable to their executive officers and directors in the proxy-related materials that they send to shareholders in advance of annual meetings of shareholders. However, the effects of the COVID-19 pandemic are causing many companies to postpone their annual meetings and as a result, they may experience difficulties or be unable to comply with certain disclosure requirements, including with respect to executive compensation, in a timely manner.

In response to these issues the Canadian Securities Administrators have announced that the deadlines for filing and delivering to securityholders the prescribed executive compensation disclosure will be extended. Normally companies must file this disclosure within 140 days (for senior companies) or 180 days (for junior companies) of their financial year-end.

The announced relief allows for companies to delay the filing and delivery of their executive compensation disclosure until no later than  December 31, 2020. Companies will have the option to file and deliver their executive compensation disclosure as a standalone document provided that it is filed and delivered by the December 31, 2020 deadline and is also included in the proxy-related materials sent to securityholders in respect of the next annual meeting thereafter. In order to rely upon the relief a company must issue and file a news release in advance of the current filing and delivery deadline that would otherwise apply, announcing its reliance on the relief. The relief is also conditional upon the company having filed its annual financial statements and MD&A for its most recently completed financial year before it files and sends: (i) proxy-related materials containing the executive compensation disclosure to which the relief applies; or (ii) the same executive compensation disclosure as a standalone document.

The announced relief also exempts companies from the requirement to send annually a request form to its securityholders and copies of its annual or interim financial statements and MD&A to its securityholders who request them. This exemption applies provided that the company sends to its securityholders its annual financial statements and MD&A on or before December 31, 2020 and sends copies of any requested annual and interim financial statements and MD&A to any securityholder that requests as soon as practicable after the prescribed deadline.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.