Update Let’s get digital


Update Let’s get digital – A practical view: COVID – 19 Crisis versus general meeting

Updated statement following the publication in the annexes to the Belgian Official Gazette of the Royal Decree of 28 April 2020 extending the measures taken by the Royal Decree No. 4 of 9 April 2020. The Royal Decree No. 4 has introduced alleviating measures enabling companies to organise their general meetings without violating the mandatory rules to combat the COVID-19 virus. The Royal Decree of 28 April 2020 has extended the temporal scope of the exemption until 30 June 2020. However, the extension until 30 June 2020 does not affect the deadline for the annual general meeting. The principle remains that the meeting may be postponed for a maximum of 10 weeks after the deadline permitted by law.

Physical meetings have become impossible in light of COVID-19 Crisis and the measures imposed by the government.

In this context, 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 on 9 April 2020, temporarily implementing a number of alleviating measures, intended to enable companies to convene their general meetings in accordance with the mandatory rules put in place to combat the COVID-19 virus, insofar as these meetings have been convened or must be convened prior to 3 May 2020. The Royal Decree of 28 April 2020 has extended the temporal scope of the exemption until 30 June 2020.

1. On the scheduled date in writing, remotely or via digital means

The shareholders can always take unanimous and written decisions that fall within the competence of the general meeting, with the exceptions of the decisions which must be taken by authentic instrument (i.e. a notarial deed). This existing possibility already enables meetings that do not require a physical presence, thereby complying with the measures imposed in light of the COVID-19 crisis.

In addition, the governing body may convene the general meeting by which it prohibits members from being physically present and obliges them to exercise their voting right prior to the general meeting by means of a voting form or by granting a power of attorney to a person appointed by the governing body acting as a proxy holder. In such a case, the appointed proxy holder, the members of the bureau, the directors and the statutory auditor may validly participate from a distance (e.g. by telephone or video conference). In this case, the right of the members of the meeting to ask questions to the directors must be exercised in writing, in which case the directors must answer the questions in writing at the latest before the start of the general meeting.

Meetings via video conference or telephone with a limited number of shareholders remain possible. Shareholders or members must be able to deliberate, speak and exercise their voting rights. This option does not need to be explicitly included in the articles of association of the company concerned. Every company can organize their general meeting digitally, regardless of whether this option is included in the articles of association. The shareholders can ask questions to the directors in writing or via the digital means of communication, whereby the directors can answer the questions orally during the general meeting.

If an authentic instrument (i.e. a notarial deed) is required, it is sufficient for one member of the administrative body or a person appointed by the administrative body to physically meet with the notary, meaning the other members of the general meeting can participate via an electronic means of communication.

2. Postponement

The proxy decision also includes the possibility to postpone the annual general meeting (pertaining to the annual accounts) for a maximum of 10 weeks following the latest date on which the meeting should have taken place in normal circumstances. This means that the new general meeting must take place no later than 6 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 (i) has the alarm bell procedure on its agenda as a result of the net assets becoming negative (or are at risk of becoming negative) or (ii) has been convened by the statutory auditor or the shareholders.

This option can also be applied by companies that have already convened the general meeting, provided that the shareholders and members are correctly informed about this.

3. Conclusion

The COVID-19 crisis does not pose a major obstacle to companies’ general meetings. In addition to the existing possibility of written deliberations and decisions, each company can hold its general meeting remotely or digitally. Regarding the possibility of a 10-week extension, the question arises whether this delay will be sufficient to bridge the COVID-19 crisis. Furthermore, such postponement could also send a negative signal to the company’s customers and suppliers, leading us to the conclusion that written resolutions or the digital meeting are preferable.

It is also advisable to kill two birds with one stone by including the measures related to the continuity of the company (liquidation test, alarm-bell procedure, …) in the minutes of the board of directors pertaining to the approval of the annual report to avoid directors’ liability.

If you have any questions regarding the practical application of these options, you can always contact your regular contact person at Quorum or send an e-mail to info@quorumlaw.eu.