The Act of 20 December 2020 providing for various temporary and structural measures in the framework of the fight against the spread of Covid-19 (the "Act") recently amended the statutory provisions on the holding of general meetings remotely using an electronic means of communication, in particular Articles 5:89 (SRL/BV) and 7:137 (SA/NV) of the Code of Companies and Associations (the "CCA").
The holding of annual general meetings during the current Covid-19 pandemic has proven to be a headache for companies whose articles do not expressly authorise remote meetings. The CCA required a statutory authorization for the above companies to organize remote general meetings with a large number of participants, where the verification of the identity and the remote participation required sophisticated electronic means of communication with access control. General meetings with a small number of participants which were easily verified de visu could be validly organized by videoconference through software such as Teams, Zooms or Skype (without authorization in the articles of association).
Royal Decree No 4 of 9 April 2020, which provided such companies with a temporary solution by allowing them to hold their annual general meeting at a distance under certain conditions, was only in effect until 30 June 2020 and was not extended, despite a worsening of the public health situation in Belgium since that date.
The new rules, which are intended to be permanent, provide that a company's board of directors (thus no longer its articles) may allow shareholders to participate in the annual general meeting remotely through an electronic means of communication made available by the company. Shareholders that participate in the general meeting by such means are deemed to be present at the place where the general meeting is held for purposes of determining fulfilment of the quorum and majority requirements.
Remote participation need not be via a sophisticated electronic means of communication with access control. The shareholder's capacity and identity can for example also be verified by means of video conferencing or teleconferencing software, such as Teams, Zoom, Skype or a similar system. The choice of an appropriate means of communication will depend on the concrete circumstances. For example, if the number of shareholders is limited and everyone knows each other, verification can be done by telephone.
Electronic means of communication
The electronic means of communication used must:
- enable the company to verify the capacity and identity of shareholders (this can be done, for example, by means of an access code sent to shareholders prior to the meeting and an indication of the shareholder's full name when logging on);
- enable shareholders to directly, simultaneously and continuously be informed of the discussions at the meeting and to exercise their right to vote on all matters submitted to the meeting for a decision; and
- to enable shareholders to participate in the deliberations and to exercise their right to ask questions, unless the management body explains in the notice calling the general meeting why the company does not have such an electronic means of communication. This exception is temporary and only applies until 30 June 2021 (Article 43 of the Act of 20 December 2020).
The explanatory memorandum states that the exception referred to in point (c) above is intended to temporarily allow, subject to a justification, a company to provide solely for the real-time transmission of its annual general meeting. In this case, shareholders will have the possibility to follow the general meeting live but cannot actively participate in the deliberations.
Shareholders that nevertheless wish to actively participate in the meeting and exercise their right to ask questions should be allowed to attend the annual general meeting in person. In our view, this alternative is difficult to reconcile with the public health measures in force, which require teleworking and aim to drastically limit physical gatherings.
Moreover, this exception concerns only deliberations and the right to ask questions, not the right to vote, which implies that shareholders should indeed be able to vote by electronic means of communication (either orally, if this is feasible in practice, or via a voting system ensured by the electronic means of communication).
The notice calling the annual general meeting must contain a clear and precise description of the procedures for remote participation. The minutes of the annual general meeting must moreover mention any possible technical problems and incidents that could prevent or disrupt participation by electronic means in the general meeting or voting.
The members of the committee presiding over the annual general meeting may not attend the meeting by electronic means and must thus in principle attend in person.
The explanatory memorandum indicates that this provision is intended to protect an essential interest, as the members of the presiding committee are the persons that must sign the minutes of the annual general meeting (which may take the form of a private agreement or a notarial instrument) and that assume responsibility, on behalf of the company, for the valid composition of the general meeting held remotely. Nonetheless, the compatibility of this provision with the public health measures currently in effect is debatable.