Legal Alert - April 10. 2020 - More flexible General Meetings during the COVID-19 crisis
Government measures to combat the COVID-19 virus make it difficult to organise many planned general meetings. In our newsletter of March and a recent legal alert, possible alternatives to the physical general meeting, such as written decision-making and the electronic general meeting, were already discussed.
Minister of Justice Koen Geens, in collaboration with the Federation of Enterprises in Belgium (VBO), has now drawn up a Royal Decree to simplify the organisation of annual general meetings. 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 Belgian Official Gazette on April 9, 2020.
ADDITIONAL OPTIONS FOR THE ORGANISATION OF THE GENERAL MEETING
The flexible scheme of the Royal Decree can be applied by companies, associations and other legal persons, even if their articles of association do not provide for this and even if they expressly oppose it. In essence, there are two options:
1) A private general meeting on the scheduled date
One can choose to allow the meeting to take place, but in circumstances that are compatible with the measures taken in response to the Covid-19 pandemic.
This can be done, for example, by organising the general meeting electronically, even though the articles of association do not explicitly provide for this possibility. However, it must be ensured that shareholders or members can exercise their voting rights and ask questions. If necessary, the management body can only allow questions in writing. These questions must then be answered in writing and before the vote at the latest. If the meeting is broadcast live or deferred (e.g. by audio or video conference), the questions may also be answered orally during the meeting. During such an electronic general meeting, the members of the bureau, the directors, the auditor and the proxy holder do not have to be physically present. They may participate by telephone or videoconference.
In addition, the management body may decide that the participants in the general meeting may only vote remotely before the meeting, in combination with voting by proxy. The managing body can impose that the proxies are granted to a specific person. This person may then only vote on behalf of the shareholder or the member provided that he has specific voting instructions for each item on the agenda.
2) Postponement of the general meeting
The second option is to postpone the general meeting to a date when the situation has returned to normal, even if the meeting has already been convened. To this end, a number of legal deadlines are extended, including the deadline of six months after the end of the financial year within which the annual general meeting must approve the annual accounts, and the deadline of seven months for filing the annual accounts with the National Bank of Belgium. These periods are extended by 10 weeks. For companies or associations that have closed their financial year on December 31, 2019, this means that the general meeting can be postponed until September 8, 2020. The approved annual accounts must then be deposited with the National Bank of Belgium no later than October 8, 2020.
However, this postponement is not permitted if the alarm bell procedure applies to the company in question or if the general meeting has been convened at the request of 10% of the shareholders or by the statutory auditor. In this case, one can opt for the first option.
WRITTEN OR ELECTRONIC MEETING OF THE MANAGEMENT BODY
The Royal Decree confirms that the management body, which must meet prior to the general meeting, can also deliberate and decide in writing or electronically. Even without a statutory authorisation, it is possible to meet by telephone or videoconference. In addition, the management body can also decide by unanimous written decision, even if the articles of association oppose this.
MEASURES LIMITED IN TIME
The special measures shall apply from March 1st, 2020, and apply to:
- All meetings convened between March 1st and May 3rd;
- All meetings to be held between April 9 and March 3rd;
- All meetings that should have been held between March 1st and April 9, but were not held.
A meeting convened before May 3rd may also be held in accordance with the provisions of the Royal Decree, even if it is held after May 3rd.
Mazars