A Welcome Change Resulting from the COVID-19 Pandemic

Siddharth Bahl

Siddharth Bahl

  585.231.1484

  sbahl@hselaw.com

In November 2021, New York Governor Kathy Hochul signed into law legislation to permanently amend provisions of New York Business Corporation Law (“NYBCL”) to explicitly allow New York corporations to hold virtual-only shareholder meetings and conduct other business using electronic means.

Unlike corporations in Delaware (which have been authorized by statute to hold virtual shareholder meetings since 2000), until the COVID-19 pandemic, a strict reading of the NYBCL required New York corporations to hold shareholder meetings in person. The historical provision required shareholder meetings to be held “at such place” as the corporation’s board of directors determined.

Near the beginning of New York State’s response to the COVID-19 pandemic in March 2020, the governor temporarily suspended the requirements of the NYBCL to the extent that they required shareholder meetings to be held in person through a series of executive orders. This action gave New York corporations the legal flexibility to do what many had concluded was the safest option during a global pandemic: hold virtual-only shareholder meetings where the presenters could be heard by all participants by means of electronic communication.

In the spring of 2021, the New York legislature acted to temporarily codify the effect of the 2020 executive orders. This action allowed a New York corporation to hold virtual-only shareholder meetings through December 31, 2021, as long as the corporation’s certificate of incorporation and bylaws did not limit these meetings to in-person only.

To the relief of corporate secretaries and these authors, in November 2021, the expiration date of this law was removed. Now, New York corporations can use electronic means to hold virtual-only shareholder meetings and to conduct board actions if not restricted by their certificate of incorporation or bylaws. In making this change permanent, the legislature noted: “meetings have successfully been conducted via electronic communications and corporations should continue to have this flexibility after the COVID-19 pandemic ends.” 

In order to take advantage of this flexibility, New York corporations should review their certificate of incorporation and bylaws to ensure they do not restrict the corporation’s options for board and shareholder meetings.

If you have any questions about this important update to the NYBCL, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets group at 585.232.6500 or 716.853.1616.

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