Virtual Annual Meetings

The gradual normalization of activities that has been taking place in phases in accordance with the measures dictated by local authorities, significant travel restrictions remain in place while changes in personal and commercial relationships continue to ensue. Social distancing continues to be of fundamental importance in order to circumvent a relapse towards a second pandemic curve that must be avoided at all costs. The disruption of business operations worldwide due to the pandemic along with social distancing policies have imposed significant changes in the operations and management of businesses and institutions.

Companies are being forced to migrate to virtual processes, including a significant reduction in in-person interaction. Many directors and shareholders may choose not to attend the annual general meeting or Board meetings in person due to travel restrictions or safety concerns. To avoid interruptions in their day-to-day operations, companies should consider holding the meetings virtually by means of remote communication. Modern bylaws and the corporate law of many states, including Florida provides, for the possibility of virtual participation to corporate meetings.

Specifically, Florida Statute 607.0709 allows for remote participation and voting in annual and special meetings of shareholders to the extend the board of directors authorizes such participation. Any person participating by means of remote communication in the shareholders meeting shall be deemed present in person and may vote in such meeting if the company has complied with the following requirements: (i) verify that each person participating remotely as a shareholder is a shareholder, is another person entitled to vote on behalf of a shareholder, is an attorney in fact for a shareholder, or is holder of a proxy and (ii) provide such persons a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to communicate, and to read or hear the proceedings of the meeting, substantially concurrently with such proceedings.

A similar provision is contained in the Florida Revised Limited Liability Company Act. Fla. Stat. § 605.04073(6) specifically contemplates that participation “by a conference telephone call or other communications equipment if all persons participating in the meeting can hear each other” is tantamount to in person participation. To the extent the agenda of the meeting does not require a discussion and all matters are essentially decided by the required majority, the shareholders/members may also enter into an “action without meeting” expressly allowed for corporations in Fla. Stat. § 607.0704 and for limited liability companies in Fla. Stat. § 605.04073(4) and (5). These provisions are widely 3 popular in modern bylaws and operating agreements.

The consenting shareholders/members should follow any applicable advance notice provision to ensure the validity of the action without meeting. The certificate of incorporation and the bylaws of the corporations or the articles of organization and operating agreements of limited liability companies should be reviewed in order to determine whether there are prohibitions or limitations for the meetings to be held by means of remote communication. If there are restrictions in place, in some cases a resolution of the Board of Directors authorizing remote meetings or an amendment of the bylaws or operating Agreement will suffice to allow for virtual meetings.

Notice of the meetings and proxy statements may also need to be updated if there is a change in the format, location and time of the meeting. Companies may mitigate the challenges presented by the pandemic in the daily operation of their businesses by securing effective communication and ensuring that decisions are taken timely and effectively. We encourage you to contact us immediately to address any concerns in the area of corporate governance. Our firm can assist you in developing and implementing plans and strategies to ease further impacts on the operations and management of your business.