Holding Your Co-operative’s AGM Virtually

Co-operatives have expressed increasing concern over holding their upcoming annual general meeting of members (“AGM”) due to the impacts of COVID-19 on the business landscape.

For many co-operatives, holding an AGM would breach social distancing measures and government orders limiting the number of people who may gather together at once. Against this backdrop of conflicting legal obligations, co-operatives are understandably unsure how to navigate their statutory AGM requirements.

As we discuss below, one option may be to hold a virtual AGM. The availability of this option varies province to province, depending on the rules in the provincial statutes and their related regulations.

Holding an AGM entirely electronically

The provincial legislation governing co-operatives incorporated in Alberta expressly allows for virtual AGMs as long as their bylaws allow such meetings and the members attending are able to communicate with each other.

In British Columbia, while the governing legislation provides that co-operatives may either hold in-person meetings or “hybrid” meetings, whereby attendees may participate in person or virtually, a recent ministerial order now permits co-operatives to hold fully virtual meetings for the duration of the declared state of emergency in British Columbia as long as their bylaws allow. Read our Virtual Meetings Permitted Under the Emergency Program Act (British Columbia) blog post for more information.

In Manitoba, the governing legislation provides that a co-operative holding two or more simultaneous meetings in different locations may do so virtually, as long as its bylaws allow it and it follows the rules in the related regulation. Subject to the co-operative’s bylaws authorizing such a meeting, Manitoba’s Registrar will permit co-operatives to hold an entirely virtual AGM.

The co-operative statute in Saskatchewan does not allow virtual AGMs, as such statute requires AGMs be held “at the place within Saskatchewan”. Although the co-operative statute in Saskatchewan specifically provides that directors meetings may occur virtually, the same is not provided in respect to members meeting, on which the legislation is silent. Although a virtual AGM is not possible, Saskatchewan co-operatives do have other options, as discussed below.

In those provinces where members will be attending a virtual AGM, the members must be able to communicate adequately with each other. However, it is not entirely clear what “adequate communication” means. As stated in our The Virtual Reality of COVID-19: Is Your Company Prepared to Hold its Annual General Shareholders Meeting Virtually? blog, at this time there is no judicial opinion about what “adequate communication” means. At a minimum, all participants at the virtual AGM must be able to hear each other clearly at the meeting.

Co-operatives in British Columbia, Alberta and Manitoba should review their bylaws and consider whether any amendments are required in order to hold an entirely virtual AGM.

Restrictions on electronic AGMs

Co-operatives interested in holding a virtual AGM in British Columbia, Alberta, and Manitoba should consult their bylaws to determine if a virtual AGM is allowable. When doing so, particular attention should be paid to any restrictions in respect of member meetings. For example, a co-operative with a bylaw stating that an AGM must occur at a particular location would likely not be able to hold a virtual AGM without breaching the location requirement. Co-operatives in this position may wish to amend their bylaws or delay their AGMs.

Establishing a quorum for an electronic meeting

Establishing a quorum is an important legislative requirement of an AGM. Unlike a normal in-person AGM, members participating in an AGM through virtual means are not physically present at an AGM. Therefore, members participating virtually are not automatically counted towards quorum. In corporate law, there are instances where shareholders may attend virtual meetings, but are not considered present. Accordingly, it is important to determine if participants at a co-operative’s virtual AGM are considered present. Both British Columbia’s and Manitoba’s co-operative statues, and the Alberta co-operative regulations, deem those participating virtually at an AGM to be present at the AGM. This means that a co-operative in those provinces is able to count those members attending virtually towards its quorum.

In Alberta, there is also specific legislated voting requirements that must be adhered to when holding a  virtual AGM. In particular, the co-operative’s bylaws must contain rules about voting during a virtual AGM, and such rules must (i) permit subsequent verification of votes and (ii) permit the tallied votes to be presented to the co-operative without it being possible to identify how each person voted. Co-operatives wishing to hold a virtual meeting in Alberta should therefore also review their bylaws for these rules.

Other options available to co-operatives

If a co-operative’s bylaws do not provide for a virtual AGM, or if a virtual AGM is not possible for some other reason, the co-operative should consider delaying its annual meeting.

Due to the pandemic, Registrars in British Columbia and Manitoba have issued notices stating that they will allow a co-operative to delay an AGM. In British Columbia, the Registrar will allow a co-operative to delay its AGM for up to six months as long as members of the co-operatives are informed of the delay. In Manitoba, co-operatives have express notice responsibilities as the Registrar also requires that the co-operative issue a notice to its members by posting notices on its website and in all branches as well as at the location at the time set for the meeting. These requirements are in addition to providing notice to all of its members of the date of the postponed meeting in accordance with its bylaws and the provincial statute. The co-operative must also notify the Manitoba Registrar of the delay.

In Saskatchewan, a co-operative may request a delay of its AGM to a later date that the Registrar considers appropriate by submitting a written request to the Registrar under section 103 of the provincial statute. In Alberta, the province’s official website states it has suspended all deadlines for co-operatives in respect of AGMs and filing annual returns.

Concluding Remarks

Whether holding a virtual AGM or delaying an AGM, co-operatives should check their bylaws and governing statutes to ensure they are in compliance with the law. It is likely that Regulators will provide further updates or notices as the pandemic progresses.

As you evaluate your co-operative’s ability to hold a virtual AGM, you should continue to monitor your co-operative’s applicable government websites to ensure you are taking advantage of any relief available to your co-operative. In determining whether to hold a virtual AGM or delaying your AGM, MLT Aikins would be pleased to assist with examining your co-operative’s options.

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.