UPDATE:
On March 31, 2020, Iowa Governor Kim Reynolds issued a proclamation allowing physical meetings of shareholders, policyholders, members, etc. to be held by means of remote communication to the extent that the attendees are provided a reasonable opportunity to participate, communicate, read or hear the proceedings, and vote on matters submitted for action. Here is the Governor’s full proclamation on this matter:
ELECTRONIC CORPORATE SHAREHOLDER MEETINGS
SECTION FIVE. Pursuant to Iowa Code § 29C.6(6) and Iowa Code § 135.144(3), and in conjunction with the Iowa Department of Public Health, I temporarily suspend the regulatory provisions of Iowa Code chapters 490, 491, 499, and 501A to the extent they require a physical meeting of shareholders, policyholders, or members, if the meeting is held by means of remote communication and provides shareholders, policyholders, or members a reasonable opportunity to participate in the meeting and to vote on matters submitted for action at such meeting, including an opportunity to communicate, and to read or hear the proceedings of the meeting, substantially concurrently with such proceedings.
Does your Iowa corporation have an upcoming shareholder meeting, and you are worried about the limits on in-person gatherings? Here are several possible alternatives to holding that shareholder meeting in person:
1 - Hold a Remote Meeting
The Iowa Business Corporation Act (“IBCA”) allows the board of directors of a corporation to authorize participation of shareholders of any class or series by means of remote communication. The fact that the board has authorized remote participation in a shareholder meeting as well as the proposed method by which shareholders would participate must be included in the notice of meeting sent to shareholders per notice requirements under the IBCA. To the extent notice of a meeting has already been sent to shareholders, the corporation may need to send out an updated/amended notice of shareholder meeting including these details. You will also want to make sure nothing in the corporation’s governing documents prohibits remote participation and will want to make sure to comply with all notice and other requirements for shareholder meetings applicable to the corporation in its bylaws and in the IBCA.
2 - Take Written Action by Consent
If the corporation has a small number of shareholders and/or the corporation is comfortable that it will receive adequate approval from its shareholders, preparing an action by consent of the shareholders is a good alternative to an in-person meeting. A written action by consent consists of a written document setting forth resolutions of the actions taken, signed by the number of shareholders required to meet the threshold for taking action without meeting in the corporation’s governing documents and the IBCA. The corporation will want to make sure nothing in its articles of incorporation prohibits taking action by consent without a meeting, and will want to make sure that it receives enough signatures of its shareholders to reach the required thresholds set forth in the corporation’s governing documents and the IBCA.
3 - Call Meeting and Adjorn to Later Date
If the corporation’s governing documents have a fixed date for the shareholder meeting, another option is to call the meeting for the fixed date but have the chairperson immediately adjourn the meeting to a later date. The notice of meeting sent to shareholders would include notice of the originally scheduled meeting as well as notice that the originally scheduled meeting will immediately adjourn and be scheduled for a later date due to a global pandemic. This option is subject to what the corporation’s governing documents provide in regards to record dates, adjournment, and general guidance on shareholder meetings.
If you would like further information on the above options or would like assistance preparing the necessary documents, please contact any BrownWinick attorney.
For additional updates on COVID-19 and other relevant legal guidance, please visit our COVID-19 Resource Page.
