Corporate compliance while social distancing: Use of remote meetings and electronic signatures by Oklahoma corporations
In light of COVID-19 and the various restrictions on social distancing resulting from it, we have reviewed the options available under Oklahoma law allowing for remote meetings and electronic signature of written consents by shareholders and directors of Oklahoma corporations.
Meetings and consents of shareholders
Remote meetings of shareholders are permitted under Oklahoma law, but the corporation’s board of directors will need to explicitly provide for that option by a resolution: “If authorized by the board of directors in its sole discretion, and subject to such guidelines and procedures as the board of directors may adopt, shareholders and proxyholders not physically present at a meeting of shareholders may, by means of remote communication: (a) participate in a meeting of shareholders, and (b) be deemed present in person and vote at a meeting of shareholders” provided that: (1) the corporation implements reasonable measures to verify that each person appearing by electronic means is a shareholder or proxyholder, (2) the corporation implements reasonable measures to provide shareholders a reasonable opportunity to participate in the meeting and vote, including having an opportunity to read or hear the proceedings concurrently with the proceedings; and (3) if the shareholder votes by means of remote communication, a record of the vote is maintained by the corporation. 18 O.S. § 1056(A)(2).
Electronic communications used for taking action via written consent are also permitted, unless the bylaws or certificate provide otherwise. The Oklahoma General Corporation Act instructs that actions that could have been taken at a meeting “may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock” having at least the minimum number of votes that would be required to take the action at a meeting and delivered to the corporation. 18 O.S. § 1073(A). The Act provides that “telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a shareholder . . . shall be deemed to be written, signed and dated for the purposes of this section” provided that the corporation can determine that the transmission came from the shareholder and the date on which it was transmitted. Id. § 1073(C). However, no consent given electronically will be deemed to have been delivered until it is reproduced in paper form and delivered to the corporation. Id.
Meetings and consents of boards of directors
Electronic meetings of boards of directors are also acceptable unless the corporation’s bylaws provide otherwise. The Oklahoma General Corporation Act provides that unless the bylaws or certificate of incorporation state otherwise “Members of the board of directors . . . may participate in a meeting of the board . . . by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear or otherwise communicate with each other.” 18 O.S. § 1027(F)(4). Participation by electronic means also counts toward the quorum requirement. Id.
Actions by written consent accomplished via electronic communications are also acceptable. The Oklahoma General Corporation Act notes that action of the governing body by written consent is valid if all members of the governing body “consent thereto in writing or by electronic transmission.” Id. Under the Act, an “electronic transmission” is “any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.” Id. § 1075.2(C).
Electronic signatures and Docusign
Although it is not a statutory prescription, many corporate bylaws require that actions taken by written consents require those consents to be “signed” by all members of the board eligible to vote. Interestingly, the board of directors provisions in the Corporation Act don’t address what constitutes a signature directly as the shareholders provisions do, and therefore doesn’t address what constitutes a “signature” when an electronic transmission is used to achieve consent of directors. However, given the acceptance of electronic signatures in other areas and the definition of “electronic transmission,” it seems that electronic signatures for purposes of written consents by a corporate board would also be acceptable.