On March 5, 2020, South Dakota Governor Kristi Noem signed HB 1113 into law, which aims to “provide for remote participation in a shareholders’ meeting.” The new statute, SDCL § 47-1A-709, will be effective July 1, 2020, Davenport Evans lawyer Michael J. Srstka explains.  It provides that the board of directors may authorize shareholders and proxies of shareholders to remotely participate in shareholder meetings. While the board of directors has the sole discretion to allow remote participation in shareholder meetings, the board remains “subject to any guidelines and procedures adopted by the board of directors” in making this decision. The new law also requires the corporation to implement reasonable measures to verify that each participant in the remote meeting is actually a shareholder or a proxy, and the corporation must implement reasonable procedures to ensure that participants have the ability to participate in the meeting and vote. The law states that participants must have the “opportunity to communicate and to read or hear the proceedings of the meeting concurrently with the proceedings.”

While this law was not passed in direct response to the ongoing COVID-19 pandemic, it does make it easier for corporations to engage in social distancing by allowing shareholders to meet remotely. However, it is important to note that the board of directors will remain subject to any guidelines and procedures previously adopted by the board. Additionally, the new law only applies to shareholder meetings, so a corporation may wish to consider amending its bylaws and/or articles of incorporation to expressly allow remote participation in meetings. Furthermore, this new law does not apply to LLCs or entities other than corporations. As the business environment continues to evolve, it is always a good idea to ensure that the documents governing your business are kept up to date.  Please contact us if you would like assistance in reviewing and updating your corporate documents.

Davenport Evans lawyers are here for you. COVID-19 raises new employment, tax, and business questions. We remain available to help your company through these uncertain times. Like most of you, our law firm has made some adjustments. We are no longer seeing clients in the building, but are holding meetings by phone, video conference, and conference call, and are exchanging documents by email and fax. Some of our attorneys and staff are working remotely until the crisis subsides. All have secure, remote access to our systems consistent with our data privacy and security policies. You can call our main number, 605-336-2880, email [email protected], or reach a specific lawyer, through our Our Lawyers directory page. Thank you for choosing Davenport Evans, and please be well.

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