Message from the Chair of the NCBA Business Law Section
By Ben Baldwin
Chair of the NCBA Business Law Section
Dear Members of the Business Law Section:
Yesterday (Wednesday April 1, 2020) Governor Roy Cooper issued Executive Order 125 (“Authorizing and Encouraging Remote Shareholder Meetings During the COVID-19 State of Emergency”).
The Order, which is limited in effect to corporations holding shareholder meetings under the North Carolina Business Corporation Act (the “Act”), is intended to facilitate the holding of shareholder meetings against the backdrop of the Governor’s prior Executive Orders (and various municipal orders) limiting mass gatherings during the COVID-19 crisis.
Specifically, Executive Order 125 (which covers annual meetings under Section 55-7-01, and special meetings under Section 55-7-02) provides that:
- During the COVID-19 state of emergency, the Board of Directors of a corporation may, in its sole discretion, determine that all or any portion of a shareholders’ meeting may be held solely by means of remote communication, and shareholders may participate in such meeting by means of remote communication (the latter concept being consistent with Section 55-7-09 of the Act, as currently drafted).
- Any person authorized by the Board of Directors to preside or otherwise carry out responsibilities at such meeting shall be permitted to do so by means of remote communication.
- For purposes of Section 55-7-05 of the Act (and presumably Section 55-7-01 and 55-7-02 as well, although this reference is not made), the place of the meeting shall be deemed to include the method of remote communication through which shareholders may participate in a meeting held solely by means of remote communication.
- To the extent a shareholders’ meeting is held at a physical location, the Board of Directors may limit the number of in-person attendees to comply with the Governor’s Executive Orders restricting mass gatherings.
- The Secretary of State is directed that meetings held by remote communication in accordance with the Order do not, by reason of having been held by remote communication, fail to comply with the Act.
- The Order is not to be construed to mean that shareholders’ meetings held by remote communication would have failed to meet the requirements of the Act in the absence of the Order (which seems intended to bless shareholders’ meetings held by remote communication before the issuance of the Order).
Ben Baldwin
NCBA Business Law Section 2019-2020
APRIL 2, 2020