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COVID-19 Impact on Annual Shareholder Meetings

Written by: Gena B. Lavallee

3/30/2020

My New Hampshire Corporation’s annual shareholder meeting is scheduled to occur in the next few weeks. Are we allowed to hold the annual shareholder meeting by videoconference due to the COVID-19 outbreak?

In light of the stay at-home emergency order issued by Governor Sununu in response to the COVID-19 outbreak, it is important to determine whether your New Hampshire corporation can hold its annual shareholder meeting by videoconference or other remote communications.

Whether a corporation may have shareholders act without a meeting, as an alternative to holding an in-person or remotely attended shareholder meeting depends upon whether the corporation’s articles and bylaws provide for such action. Section 7.04 of the New Hampshire Business Corporation Act (the “Act”) allows shareholders to do so, subject to various requirements.  The action must be taken by all the shareholders entitled to vote and must be evidenced by written consents bearing the date of signature of each shareholder and describing the action taken.  The signed and dated consent must be delivered to the corporation for inclusion in the minutes or filed with the corporate records.  A remote shareholder meeting may be preferable if taking action by written consent of all shareholders is not feasible. 

In order to hold a remote shareholders’ meeting, a corporation’s articles and bylaws must include a provision expressly allowing or prohibiting shareholder meetings by remote means, including video conference.  If remote meetings are permitted, you may conduct the meeting in that fashion, being certain to comply with all other procedural and notice requirements under the Act.

If remote meetings are prohibited, you will have to undertake further analysis of your articles and bylaws to determine the board’s authority and the feasibility of amending the corporation’s bylaws to allow for remote meetings.  Section 7:09 of the Act allows for remote participation by shareholders in annual and special meetings, provided that the board of directors has authorized remote participation. The corporation must implement reasonable measures to verify that each participant in the meeting is a shareholder, allow shareholders a reasonable opportunity to participate, vote on the matters submitted to them for consideration, communicate, and ensure that shareholders can read or hear the proceedings of the meeting, all substantially concurrently with the conduct of the meeting. The Act does not provide guidance on tallying or recording of shareholder votes. However, a clear record must be kept by the corporation, documenting approval of resolutions by shareholders and compliance with the Act in the fashion that the corporation would use for shareholder meetings with shareholders physically in attendance.

The text of Act can be found by clicking on the following:

https://www.gencourt.state.nh.us/rsa/html/NHTOC/NHTOC-XXVII-293-A.htm

Governor Sununu’s emergency orders can be found by clicking on the following:

https://www.governor.nh.gov/news-media/emergency-orders/

 

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