by: Rod Escayola |
The single most asked question (after “why are people stocking up on toilet paper?”) is should you cancel/postpone your AGM this year, as part of the required social distancing measures? While the situation is in flux, here are our views on this.
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Update on the spread of the Coronavirus
While the World Health Organization assesses the Coronavirus (COVID-19) as a pandemic, the risk for Canadians continues to be assessed as low (as of the date of this blog post). Still, the reported cases have tremendously increased over the last 48 hours. Canada, Ontario and many cities are imposing various restrictions to reduce the spread of the virus.
The single two most important precautions to take continue to be:
- Increased personal hygiene (proper washing of hands and sneezing etiquette)
- Social distancing measures:
- Avoid unnecessary travels
- Avoid unnecessary gathering.
In line with the above precautions, many public institutions (Schools, universities, churches, museums, court houses, gyms etc.) are shutting down. Moreover many employers are encouraging their employees to stay home. Ontario advises against public gatherings (of over 50 attendees). Many cities are encouraging their owners to simply stay home. Some employers have cancelled any event with more than 15 attendees.
This brings us to today’s question.
Should you cancel your AGM?
We are about to enter into AGM season, with many thousand condos holding their AGM in the next few months. AGMs, by their nature, require the gathering of as many owners as possible. These owners will all be crammed into a single room, after having lined up for registration; and after having shared pens (for registration and voting). Scrutineers will gather ballots from everyone present and manipulate them to tally the results of any elections. Throughout the event, owners will be seated within mere inches from one another.
In the current situation, can we responsibly hold condo AGMs amid the spread of the coronavirus?
The answer may depend on numerous factors:
- How big is your corporation? What’s it’s layout (townhomes vs. high rises)?
- Where is your corporation located (GTA or a more remote / isolated area)?
- What’s the layout and set up of the meeting room?
- What are your demographics (based on age – not ethnicity! )?
- And, most importantly, when is your AGM?
AGM less than a month away
While AGMs must be held within 6 months of the end of the fiscal year, we are presently facing an unprecedented situation. If, in normal times, all reasonable efforts should be made to hold the AGM within the prescribed period, there are no prescribed consequence to a delayed AGM.
In our view, postponing an AGM in the present circumstances would be in the best interests of the owners and the Corporation as a whole. In fact, it may be irresponsible to hold an AGM until the situation resorbes. In our view, postponing the AGM may very well be what a reasonably diligent and prudent director would do in the circumstances.
Be sure to consult with your condo lawyer to help you navigate through these difficult times.
AGM more than a month away
If your AGM is more than a month away, you may want to keep monitoring the situation. It evolve on a daily (sometimes on an hourly) basis.
So, unless there are significant cost involved in scheduling and cancelling the AGM (are you renting space at a venue?), you may want to keep the AGM date and keep monitoring the situation. You can always change the date between the preliminary notice and the general one. You may want to use our AGM calculator to calculate the applicable deadlines to send your notices out.
As your AGM approaches, you should re-assess the situation more carefully. As we see it, you can use the following rating:
- Green state: business as usual
- Yellow state: increased precautions required
- Red state: cancel all non-essential activities and non-essential gatherings.
Precautions to take if you are going to hold your AGM
Subject to any contrary advice from the local authorities, in low risk situations (smaller condo corporations, or those more isolated geographically), if you are going to hold your AGM, you may want to implement the following measures:
- Encourage owners to only send one person per unit (some owners attend as a couple);
- Encourage owners to attend by proxies, especially those who:
- may be more vulnerable or with underlying health issues;
- have recently returned from travels;
- feel sick or fear they have been exposed.
- Keep the meeting short and limited to what is essential:
- Approval of prior Minutes;
- Appointment of an auditor for the following year (the auditor does not need to attend and, in fact, many are cancelling their usual attendance);
- Election of director(s) as required;
- You may want to skip or postpone the general discussion.
- Consider reminding people about social distancing and etiquette:
- Consider minimizing the exchange of papers and pens amongst participants.
- Think of registration time:
- perhaps you can stagger registration so not everyone lines up at the same time;
- owners may not need to physically sign an attendance sheet. It may be sufficient for the person at the registration desk to identify them and check them in (less handling of the pen);
- Consider electronic voting to avoid having to deal with proxies, ballots and scrutineers;
- Consider having proxies sent in electronically or by email (less paper handling and manipulation).
Remote or electronic AGMs
In higher risk situations (for bigger corporations or those in a city having reported cases of infection), you may want to consider more drastic measures.
Consider holding the AGM by proxy only:
Ensure you have sufficient proxies in hand to reach quorum and hold the meeting << on paper >>.
The physical meeting could be limited to very few individuals (maybe the manager, a director, a well-respected and trusted owners (to reassure the community that things unfolded properly and that this was not an evil plan by the board to take over the world)).
Consider holding the AGM by teleconference or by webinar.
For this to comply with the Condo Act, you should have sufficient proxies to reach quorum. Owners can then dial-in or login and participate remotely. We are setting this up already for some of our clients. It can work quite well. We’re happy to help.
Keep in mind that, in such circumstances, it is essential to properly complete proxies: you think sneeze etiquette matters? Think proxy etiquette!. Owners must understand that, depending on how they have completed the proxy:
- It may only count as quorum
- May allow the proxy holder to vote for them
- May allow them to lock in their vote
The key is to communicate, communicate, communicate with owners.
The Killer Question
While drafting this blog post a scary thought came to mind: what about requisitioned meeting? Should they go ahead? Postponing such a meeting may be far less welcomed and may attract more scrutiny and criticism.
If you are faced with an approaching requisitioned meeting, the best first step should be to seek the consent of the requisitionists to either postpone their meeting until the next AGM or to push it by a couple of weeks until things calm down. If possible, the corporation may want to consider also postponing the implementation of whatever it is that triggered the requisitioned meeting. For example, if the meeting was requested to vote on a rule, perhaps the implementation of the rule can be delayed.
At the end of the day, postponing the meeting may be the only reasonable option. You may want to consult with your condo lawyer if you are dealing with having to scheduled such a meeting during these troubled time.
Coronavirus Webinar March 18 – 7pm
We’ve struck together a Crisis Prevention Cell, comprised of leading industry expert. Consider joining our free webinar this Wednesday March 18, at 7pm.
Please note that the information found in this post may become out of date very quickly as the situation evolves on an hourly basis. Best to consult your corporation’s lawyer before deciding to hold or cancel the AGM.[Last updated on March 17, 2020]