North Carolina Business Corporation Act Now Permits Fully Virtual Shareholders' Meetings
Sep 23 2021
On September 20, 2021, North Carolina Governor Roy Cooper signed House Bill 320 into law, permitting North Carolina corporations to hold shareholders’ meetings solely by means of remote communication under the North Carolina Business Corporation Act (NCBCA).
Given the health concerns and logistical challenges around having a physical shareholders’ meeting during the COVID-19 pandemic, many North Carolina corporations relied on the Governor’s executive orders to conduct all or part of such meetings by remote communication during the state of emergency.1 The newly enacted legislation permits both annual and special meetings of shareholders to be held entirely by remote communication under the NCBCA.
Unless prohibited by a North Carolina corporation’s articles of incorporation or bylaws, the corporation’s board of directors may, in its sole discretion, determine that a shareholders’ meeting be held solely by means of remote communication, but only if the corporation implements procedures to:
The newly enacted legislation further provides that once a publicly traded North Carolina corporation has sent a notice of meeting to shareholders in accordance with the NCBCA, further notice to change the meeting from a physical meeting to a fully virtual meeting is not required under state law if, generally:
Publicly traded North Carolina corporations should be mindful that authorization under state law is just one consideration in assessing whether to hold a virtual meeting of shareholders; policies of key institutional shareholders and proxy advisory firms should also be evaluated in making the decision.
Importantly, remote shareholders’ meetings noticed before the effective date of this newly enacted legislation complying with prior executive orders authorizing remote shareholders’ meetings during the state of emergency are deemed in compliance with this newly enacted legislation.
Womble Bond Dickinson has more than 150 dedicated corporate and securities lawyers focused on advising public and private companies on the full range of corporate transactions, regulatory and corporate governance matters. Our team is located throughout the United States and the United Kingdom, offering transatlantic capabilities for cross-border and international matters. We have deep roots in North Carolina from our founding in Winston-Salem over 140 years ago and have grown steadily within the region to become one of the largest and longest standing law firms in the state. With offices in the three largest metropolitan areas of the state: Metrolina (Charlotte); Research Triangle of Raleigh, Durham, and Chapel Hill; and the Piedmont Triad of Winston-Salem, Greensboro, and High Point, we are deeply committed to helping build and strengthen North Carolina’s economy. Learn more here.
1 See our prior client alert titled “Remote Shareholders’ Meetings Authorized and Encouraged for North Carolina Corporations in COVID-19 Environment” (April 3, 2020).