Del. OKs Virtual Shareholder Meetings To Stem Virus Risk

By Jeff Montgomery
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Law360 (April 7, 2020, 7:01 PM EDT) -- With pandemic-related public gathering bans in place across the country, Delaware on Monday said annual shareholder meetings that have already been announced can be held virtually, in a nod to the risks from COVID-19.

Delaware-chartered oil refiner Valero Energy was among the first to make the move, announcing hours ahead of Gov. John Carney’s official statement that it had scuttled plans to convene its April 30 annual shareholder meeting at its San Antonio headquarters in favor of a web event.

The change, issued in the latest of a series of Delaware state of emergency orders, allows companies to change from physical to virtual meetings “solely by a document publicly filed by the corporation with the Securities and Exchange Commission and a press release.”

Companies taking advantage of the change also must promptly post the notice on the corporation’s website. The same emergency measure and procedure also allow corporations to cancel and reschedule stockholder meetings.

The measure only applies, however, to companies that already had scheduled and posted notice of stockholder meetings.

Valero, which owns 15 refineries, had been scheduled for weeks to gather its shareholders in San Antonio at 10 a.m. on April 30 for director elections, an advisory vote to approve 2019 executive compensation and other issues.

Instead, on Monday the company reported a change of plans due to “health and safety concerns related to the coronavirus (COVID-19) outbreak, recommendations and orders from various federal, state, and local governmental authorities, and out of an abundance of caution to support the health and well-being of Valero’s stockholders, employees, and community."

An SEC filing said Valero would host a website that shareholders could enter by using a 16-digit control number found on their proxy cards and voting instruction forms.

“We intend to offer the same participation opportunities as would be provided at an in-person meeting. You may vote and submit questions during the annual meeting by following the instructions available on the meeting website,” the announcement said.

On Tuesday, global health care and pharmaceutical business Eli Lilly and Co. cited the same range of concerns in proceeding directly to an online annual meeting, with virtually the same procedures to be used to gain access as Valero’s.

The annual meeting alternative was part of a 10th modification to Delaware’s Covid-19 State of Emergency Order, issued on March 12.

The latest change included particularly painful springtime and Easter holiday restrictions for the state, which counts coastal area tourism as an essential part of its economy and that of its southernmost county.

Under the latest decree, commercial lodging was closed through May 15 to leisure guests, with the prohibition covering hotels, motels, inns, short-term accommodations, vacation homes or condo rentals such as Airbnb and other overnight accommodations.

Exceptions were carved out for emergency and health care workers, those employed by essential businesses, victims of domestic violence, stranded travelers and others, but not vacationers.

--Editing by Bruce Goldman.

For a reprint of this article, please contact reprints@law360.com.

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