Effective Collaboration with the Governor Nets Pragmatic Solution to COVID-19 Corporate Issues in Alaska
On March 19, Dorsey attorneys successfully obtained an emergency order from the Governor of the State of Alaska, which temporarily suspends certain state laws during the coronavirus public health crisis, and allows all Alaska corporations to hold virtual and hybrid (in-person and communications equipment) annual shareholder meetings on short notice.
Every Alaska corporation must have an annual shareholder meeting, and Alaska Statutes require corporations to hold in-person annual shareholder meetings (AS 10.06.405). Most other states allow virtual or hybrid meetings, but Alaska Statutes require a meeting be held at a “place,” as provided in the corporation’s bylaws. Alaska is only one of nine states that does not allow either virtual (via communications equipment) or hybrid (in person and by communications equipment) meetings. See Harvard Law School Forum on Corporate Governance Principles and Best Practices for Virtual Annual Shareholder Meetings for an excellent summary of the current state laws related to virtual and hybrid annual meetings.
Alaska Statutes also have strict timelines for notice of shareholders’ meeting. Annual meeting notices must be delivered not less than 20 or more than 60 days before the date of the meeting (AS 10.06.410). At the time the coronavirus disaster declaration hit, some corporations had already sent out their proxy statements and notices of annual in-person meetings. It became a matter of urgent necessity to expressly allow these corporations to re-notice a meeting on short notice to a virtual or hybrid meeting, so they did not potentially face unfair exposure under Alaska law.
Several clients contacted Dorsey for advice on how to deal with our antiquated state statute. In this time of pandemic, it would be unduly risky for groups of people, for example, Alaska Native Corporation or any other type of corporation to hold large meetings where shareholders, including Elders, may fly in from all over Alaska and potentially get and/or infect others with coronavirus after attending a meeting, then potentially fly home to rural villages. This could quickly overwhelm health care facilities in Alaskan communities, some of which have few or no local medical providers.
Dorsey immediately raised the issues with the Governor’s Office and requested an emergency suspension of the in-person requirement and the notice requirement to allow Alaska corporations immediate and crucial flexibility to hold virtual meetings during this time, which would eliminate the health risks of meeting in person. On March 19, 2020, Governor Dunleavy swiftly issued the Emergency Order suspending certain provisions of the Alaska Corporations Code AS 10.06.405(a) (in person requirement) and AS 10.06.410(a) (notice requirement) for annual meetings. These provisions are now suspended until April 12, or later date, if the disaster declaration is extended. This is a great outcome for all Alaska corporations, who are trying to figure out how to comply with their mandatory annual meetings duties amidst the pandemic. Now Alaska corporations can hold virtual annual shareholder meetings on short notice.
The Dorsey Anchorage team consisting of Jill McLeod, Bonnie Paskvan and Siena Caruso have opened a pro bono file to work on a permanent change to modernize the Alaska Corporations Code as many other states have already done to give Alaska corporations the option of virtual/hybrid/in-person meetings. We will provide updates on the progress of these pro bono efforts in Alaska in future blog posts.