Virtual shareholders’ meetings – adjustment of the articles of association required!

COVID-19 regulations, such as restrictions of contacts, meetings, and travel, made it necessary to create a legal basis to temporarily allow company meetings to be held virtually. These pandemic-related provisions have been repeatedly extended for six months, but will finally expire on June 30^th, 2023.

Virtual meetings in permanent law:

To permanently pave the way for virtual and hybrid shareholder meetings, the legislator has now issued a draft for the “Virtual Shareholder’s Meetings Act” (VirtGesG). The act is set to come into force on July 14^th, 2023. The main difference to the current legal situation is that virtual meetings are only permissible if this is provided for in the articles of association.

The annual meeting of AGs and SEs, the general meeting of GmbHs as well as the meetings of associations and savings banks are covered by the new regulation. Meetings of members of executive bodies (e.g. the board of directors, the executive management, or the supervisory board) are not regulated by the VirtGesG. According to general rules, those meetings should also be possible to be held virtually, however, due to the lack of explicit regulation, there is no legal certainty.

Types of meetings:

The type of virtual meeting and the software to be used must be determined in the articles of association. Alternatively, it can also be stipulated that the executive board can make these decisions flexibly.

Forms of virtual meetings:

• Simple virtual meeting
  In a simple virtual meeting, such as a video conference via Zoom or Teams, an acoustic and optical connection must be available in both directions. Also, each participant must have to opportunity to speak.

• Moderated meeting
  High numbers of participants can make it technically more sensible to choose a one-way transmission, with a moderator leading the debate. Shareholders must still have the opportunity to communicate electronically. The moderator must also allow requests to speak via video communication.

• Hybrid meeting
  Shareholders can also be given to option to attend the same meeting either physically or virtually. Equal treatment of the participants physically present and attending online must be ensured.

Special case: Listed stock corporations

In addition to the general regulations, there are additional provisions for listed stock corporations that are intended to protect small investors:

• Shareholders may submit their questions and proposed resolutions electronically before the meeting.
• Shareholders who summed up hold at least 10% of the share capital are given a minority right. If the last Annual General Meeting was held virtually, they can demand that the next meeting has to be held physically or hybrid.
• The provisions in the articles of association regarding a virtual or hybrid meeting are limited to five years and must then be renegotiated.

Companies in need of action!

Should the draft law be implemented as planned, from the end of June on virtual meetings can only be held, if they are provided for in the articles of association. Thus, if a company wishes to continue to hold its meetings online, it must amend its articles of association as soon as possible.