Enbridge Inc. will hold its annual shareholder meeting online this year, making it one of the first major Canadian companies to scrap plans for an in-person event as the coronavirus outbreak provokes concern about large gatherings.
The Calgary-based pipeline operator said in a regulatory filing on Monday that it will forgo an in-person meeting on May 5. In a joint letter, chairman of the board Gregory Ebel and chief executive officer Al Monaco said Enbridge made the decision out of an “abundance of caution," and to “proactively deal with the unprecedented public health impact” of the spread of the virus, which causes the disease known as COVID-19.
In a filing last month, Enbridge said it would hold its annual general meeting in Toronto, but it now says it will conduct it online to “mitigate risks to the health and safety” of its workers, shareholders and other stakeholders.
For some large companies, AGMs are elaborate affairs, complete with refreshments and video presentations, and attract hundreds of current employees and pensioners. Travel is also a common feature, as some businesses seek to highlight their national footprint with meetings in different cities. Enbridge operates a natural gas distribution business in Ontario and Quebec and though it typically holds its AGM in Calgary, it held the meeting in Toronto in 2015.
Spring is prime AGM season and lawyers say that amid the coronavirus outbreak, many of these factors – large gatherings, serving food and drink, and the need for potential travel – are prompting businesses to look for alternatives to in-person meetings.
“Enbridge is obviously a major player and I would suspect that other large issuers may follow suit," Trevor Zeyl, a securities law partner with Norton Rose Fulbright Canada LLP, said Tuesday. "We’re certainly talking to our clients about the capabilities of [virtual meeting] platforms and what best practices are.”
A move toward virtual meetings could accelerate a trend in Canada that has already taken hold in the U.S., where online AGMs have become increasingly common.
“While historically extremely rare in Canada until recent years, electronic meetings have been a growing feature of the U.S. proxy season since 2009,” Andrew MacDougall and John Valley, corporate law partners at Osler Hoskin Harcourt LLP, wrote in a commentary published for clients.
They said in recent years, some Canadian companies have held meetings fully online, including Canada Goose Holdings Inc. and Brookfield Property Partners, L.P. Others have used a “hybrid” option, with certain managers and directors present in person and others tuning in over the internet, including Goldcorp Inc. (now Newmont Corp.), Barrick Gold Corp., TMX Group Ltd., and OceanaGold Corp.
The Osler lawyers noted that Broadridge Financial Solutions, one of the main service providers that facilitate online meetings, said it conducted 326 electronic meetings in the U.S. last year alone.
Whether Canadian companies can hold virtual meetings depends in part on the relevant provincial legislation, they said, noting that Ontario law permits the practice and deems shareholders who vote online to be present, which is essential for establishing quorum. Other provinces are not as flexible. Companies must also consider their own corporate bylaws and may have to amend them to hold an electronic meeting.
Critics of virtual meetings say they can drastically reduce personal connection and shareholders’ ability to meet or ask questions of company management.
Enbridge said shareholders will have the opportunity to ask questions during its online meeting.