Update Let’s get digital – A practical look: COVID – 19 crisis vs general assembly
Updated contribution following the publication in the annexes to the Belgian Official Gazette of the Royal Decree of 28 April 2020 extending the measures taken by Royal Decree No 4 of 9 April 2020. RD No 4 introduced relaxations that allow companies to organise their general meetings without violating the mandatory rules to combat COVID-19 virus. The Royal Decree of 28 April 2020 extends the temporal scope of the exception until 30 June 2020. However, the extension to 30 June 2020 does not affect the deadline for the annual general meeting. The principle remains that one may postpone the meeting for a maximum of 10 weeks beyond the deadline allowed by law.
Holding physical meetings has become impossible in times of the COVID- 19 crisis and government-imposed measures.
In this context, on 9 April 2020, Royal Decree No. 4 containing various provisions on co-ownership and company and association law in the context of the fight against the COVID-19 pandemic was published in the annexes to the Belgian Official Gazette, temporarily offering a number of relaxations that allow companies to organise general meetings, which were or must be convened prior to 3 May 2020, subject to respecting the mandatory rules to combat the COVID-19 virus. The Royal Decree of 28 April 2020 extends the temporal scope of the exception until 30 June 2020.
1. In writing, remotely or digitally on the date provided
Shareholders can always take one-parent, written resolutions belonging to the powers of the general meeting, except for those requiring an authentic instrument. This possibility thus already precludes a physical meeting which does not affect the measures imposed in this COVID-19 crisis.
In addition, the governing body may convene the general meeting where it prohibits members from being physically present and requires them to exercise their right to vote prior to the general meeting by means of a voting form or by granting a proxy to a person appointed by the governing body to act as proxy holder. In such case, the appointed proxy holder, the members of the office, the directors and the auditor can validly participate remotely (e.g. via telephone or video conference). The right of the members of the meeting to question the directors in this case should be exercised in writing, with the directors answering the questions in writing no later than the start of the general meeting.
Meetings via video or telephone conferences with a limited number of shareholders remain possible. Shareholders or members must be able to deliberate, speak and exercise their voting rights. This possibility does not have to be explicitly included in the articles of association of the company concerned. Any company can attend the general meeting by digital means, regardless of whether this possibility is provided for in the articles of association. Shareholders can submit questions to the directors in writing or via the electronic means of communication, with the directors able to answer the questions orally during the general meeting.
If an authentic instrument is required, it is sufficient for one member of the governing body or a person appointed by the governing body to meet physically with the notary, with the other members of the general meeting able to participate via an electronic means of communication.
2. Delay
The proxy resolution further provides for the possibility to postpone the annual general meeting (to approve the annual accounts) for a period of up to 10 weeks after the deadline by which the meeting should normally be held. This means that the new general meeting must take place no later than six months and 10 weeks after the end of the financial year.
In addition, it is possible to postpone general meetings other than the ordinary general meeting. However, this possibility of postponement does not apply to a general meeting that is (i) has the alarm bell procedure as an agenda item in response to the net asset becoming or threatening to become negative, or (ii) was convened by the auditor or shareholders.
This possibility of postponement also applies to companies that have already convened the general meeting, provided shareholders and members are properly informed.
3. Decision
The COVID-19 crisis is not a major obstacle to holding the general meeting of companies. In addition to the traditional possibility of deliberating and deciding in writing, each company is entitled to hold the general meeting remotely or digitally. Regarding the possibility of postponement for a period of 10 weeks, the question arises whether this postponement would be sufficient to bridge the COVID-19 crisis. Furthermore, such delays can also send a negative signal to customers and suppliers of the company concerned, which is why we recommend holding the general meeting in writing or digitally.
It is also advisable to kill two birds with one stone by including in the minutes of the board of directors approving the annual report, the measures taken to ensure the continuity of the company (liquidation test, alarm bell procedure,…) to avoid directors’ liability.
If you have any questions regarding the practical application of these features, you can always contact your regular contact at Quorum or send an e-mail to info@quorumlaw.eu.
