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April 29, 2020

Physical Shareholder and Member Meetings Requirement Suspended Until May 15 for NYS for-Profit, Not-for-Profit Corporations

In an effort to enable corporate adherence to state-wide stay-at-home orders for non-essential businesses, absent a by-law provision expressly prohibiting such, NYS corporations are now allowed to hold shareholder meetings on an exclusively virtual basis.

On March 20, Governor Cuomo issued Executive Order 202.8, which initially suspended the New York Business Corporation Law (BCL) §602(a) requirement that shareholder meetings occur at a physical “place” as well as the BCL §§605(a) and 605(b) requirements that notice of those meetings or notice of an adjournment must state the physical location of the meeting until April 19. The suspension has since been extended on two separate occasions through Executive Orders 202.14 and 202.18, now postponing the requirement of physical shareholder meetings through May 15.   

Before the issuance of Executive Order 202.8, a shareholder meeting was required to be held at a physical location, though an option for hybrid remote participation was made available through the passing of a recent amendment to the BCL §602, effective October 23, 2019, allowing shareholders to participate in shareholder meetings through virtual means as long as the means were deemed reasonable (i.e., through phone calls, videoconferencing, etc.) and participants were capable of conveying a vote contemporaneously. However, a physical meeting location was still mandatory pursuant to BCL §602(a). Further, virtual participation was only allowed if approved by a corporation’s board of directors.

Though the New York Not-For-Profit Corporation Law (N-PCL) largely mirrors the BCL in many respects, the N-PCL has, to date, made no amendment analogous to the 2019 amendment to BCL §602 allowing remote participation by members. N-PCL § 603(a) continues to require that meetings of a not-for profit corporation’s members be held at a physical “place.” However, Executive Order 202.18, issued by Governor Cuomo on April 16, expanded the ability to hold exclusively virtual meetings to NYS not-for-profit corporations through May 15.

If you have any questions regarding the content of this alert, please contact Jim Canfield, Corporate Practice Area co-chair, at jcanfield@barclaydamon.com;  Jessie Root, associate, at jroot@barclaydamon.com; or another member of the firm’s Corporate Practice Area.

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