News & Insights
On April 1, 2020, North Carolina Governor Roy Cooper issued Executive Order 125 to encourage and authorize North Carolina corporations to hold shareholder meetings via remote communication in light of the Governor’s prior Executive Orders (and various municipal orders) ordering North Carolinians to stay home during the COVID-19 State of Emergency. The Order became effective immediately upon being issued and is to remain effective for sixty (60) days unless rescinded or superseded by another Executive Order.
Board of Director Discretion
Under Executive Order 125, the Board of Directors of a corporation may, in its sole discretion, determine that all or part of a shareholders’ meeting may be held solely by means of remote communication, provided that:
- shareholders are given the opportunity to participate in, and vote at, the shareholders meeting in accordance with Section 55-7-9 of the North Carolina Business Corporation Act (the “Act”); and
- shareholders are given the right to participate in the meeting by means of remote communication.
The Board of Directors may also limit the number of in-person attendees in accordance with the Governor’s prior restrictions on mass gatherings in instances where an in-person meeting is being held.
Presiding Over Meeting Using Remote Communication
Under the Order, any person authorized by the Board of Directors to preside or otherwise carry out responsibilities at a shareholder meeting is permitted to do so using remote communication.
Place of Shareholder Meeting
The Order states that, for purposes of Section 55-7-05 of the Act, which deals with notices of shareholder meetings, the place of the meeting shall be deemed to include the method of remote communication through which shareholders may participate in a meeting. The meetings may be held solely by means of remote communication.
Secretary of State Directed that Meetings Using Remote Communication Comply with Act
Additionally, the Order directs the Secretary of State that meetings held by remote communication in accordance with the Order do not, by reason of having been held by remote communication, fail to comply with the Act. This is consistent with Section 55-7-09 of the Act, which authorizes shareholders to participate in meetings using remote communication where approved by the corporation’s Board of Directors.
Order Does Not Mean Meetings Held by Remote Communication Outside COVID-19 State of Emergency Fail to Comply with the Act.
Importantly, the Order is not to be construed to mean that shareholders’ meetings held by remote communication would have failed to meet the requirements of the Act in the absence of such order. This provision is likely aimed at meetings held by remote via communication prior to the Order being issued, but could also be relevant to future meetings held by remote communication once Executive Order 125 is rescinded.
Should you have any questions about how Executive Order 125 applies to your business please contact Ross Hamilton at email@example.com or (336) 271-5279; Natalie Folmar at firstname.lastname@example.org or (336) 271-5220; or Spencer Krantz at email@example.com or (336) 271-5221. Please also follow our Twitter account @TuggleDuggins at https://twitter.com/TuggleDuggins for continuing, up-to-date information related to navigating the law during the COVID-19 outbreak.
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