Delaware’s Governor Enters Emergency Order Dealing with Notice of Public Company Stockholders’ Meetings
April 7, 2020
On April 6, 2020, John C. Carney, the Governor of the State of Delaware, issued the Tenth Modification of the Declaration of a State of Emergency for the State of Delaware Due to a Public Health Threat (the “Order”), stemming from the COVID-19 pandemic. Among other things, the Order promotes the safety of participants of public company annual meetings, providing public companies that, as of the date of the Order, have already given notice of a meeting of stockholders to be held at a physical location the means to switch to a “virtual meeting” and to give notice of the change by public filings and announcements, rather than giving a new written notice. (Notably, the Order does not apply with respect to public companies that, as of the date of the Order, have not given notice of their annual meeting or have given notice of a meeting to be held by remote communication.)
First, Section 4.a.(i) of the Order provides that, if, due to the public health threat from the COVID-19 pandemic, the board of a public company wishes to change a meeting that has already been noticed for a physical location to one conducted solely by remote communication, it may notify stockholders of the change solely by a document publicly filed by the corporation with the Securities and Exchange Commission (the “SEC”) pursuant to § 13, § 14 or § 15(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and a press release. Such press release must also be promptly posted on the company’s website after its release.
Second, Section 4.a.(ii) of the Order provides that, if it is impracticable, due to the COVID-19 pandemic, for a public company to convene a currently noticed meeting of stockholders at the physical location for which it has been noticed, the company may adjourn the meeting to another date or time, to be held by remote communication, by providing notice of the date and time and the means of remote communication for the meeting in a document filed with the SEC pursuant to § 13, § 14 or § 15(d) of the 1934 Act and a press release. Again, such press release must also be promptly posted on the company’s website after its release.
Finally, Section 4.b. of the Order sets forth a “savings clause” providing that if any provision in Section 4.a. is held invalid under the Constitution of the State of Delaware, or is held to violate Delaware law or to be unenforceable, such invalidity, violation or unenforceability shall not affect any other provision of Section 4.a. or the other provisions of the Order.
Section 232 of the Delaware General Corporation Law (“DGCL”) states that the manners of giving notice to stockholders contemplated thereby are not exclusive, and the Order can be viewed as providing an additional way to provide notice to stockholders of a change in the format of a meeting from a physical location to a virtual meeting in the narrow circumstances referenced therein. Nevertheless, in light of, among other things, the Order’s “savings clause,” the only way to have 100% certainty that a meeting has been duly noticed will be to comply with the applicable notice provisions of the DGCL, without regard to the Order. In addition, the Order does not change any of the information required to be provided to stockholders in the notice of a meeting by remote communication. Accordingly, any supplemental notice with respect to a change to a meeting by remote communication should contain the information required by the DGCL to be included in the notice of any such meeting.