A.1567/S.5793 amends the business corporation law to mandate that every corporation whose shares are traded on a stock exchange or in the over-the-counter market shall: (1) implement reasonable measures to provide shareholders not physically present at a shareholders' meeting a reasonable opportunity to witness the proceedings of the meeting substantially concurrently with such proceedings; and (2) provide reasonable means to enable shareholders to vote or cast proxies with respect to matters submitted to the shareholders at a shareholders' meeting by means of electronic communication.
A.1567/S.5793 would impose a tremendously costly and burdensome regulation on business. This bill would mandate the onerous implementation of measures to verify each shareholder is deemed present; permitted to vote; and participate in the shareholders meeting.
Furthermore, the costs to corporations of establishing the technological means of enabling all shareholders to participate are not accounted for in this bill. According to a New York State Bar Association Memorandum in Opposition, Broadridge Financial Solutions, Inc, deemed the concept of “virtual” annual meetings economically not feasible at the present time.
If the intent of the sponsor is to increase the ability of shareholders to have access to shareholder meetings through various forms of modern communications, then the legislation should take a permissive approach which would allow the board of directors, in its sole discretion, to provide for such means as would best accommodate the needs of the shareholders and the corporation.
The Business Council has consistently argued that New York State should develop its corporate law that makes incorporation under New York State more attractive. Currently, the vast majority of New York companies are incorporated under the laws of Delaware. Delaware has a single standard for corporations which authorizes the board of directors "in its sole discretion" to make the determinations involving remote communications. It is extremely important that boards of directors be provided the flexibility to develop the appropriate mechanism for shareholder participation and voting which best meets the needs of their shareholders and companies involved.
Therefore, The Business Council of New York State opposes this legislation and asks that this bill be held in the Senate Rules Committee.