Requirements for your general meeting by videoconference (and they have become stricter)
The COVID-19 pandemic is still raging around the world and one of the measures to contain it is to limit the number of contacts.
The annual general meetings of legal entities in which the participants classically meet physically and which, for legal entities with a financial year ending on 31 December, must be held no later than 30 June, therefore pose a risk.
In the spring of 2020, the legislator already provided for additional temporary flexibility for general meetings via RD nr. 4 (koninklijk besluit 4 van 9 april 2020 houdende diverse bepalingen inzake mede-eigendom en het vennootschaps- en verenigingsrecht in het kader van de strijd tegen de Covid-19/ arrêté royal 4 du 9 avril 2020 portant des dispositions diverses en matière de copropriété et de droit des sociétés et des associations dans le cadre de la lutte contre la pandémie Covid-19). We refer to our earlier contribution (https://racinebrussels.eu/nl/flexibiliteit-bij-de-organisatie-van-algemene-vergaderingen-en-bestuursvergaderingen-tijdens-de-corona-crisis/).
Given the continuation of the pandemic, it is not surprising that the legislator is again taking measures concerning general meetings.
Paradoxically, the new measures introduced by chapter 11 of the Act of 20 December 2020 containing various temporary and structural provisions relating to justice in the framework of the fight against the spread of the coronavirus COVID-19 (wet van 20 december 2020 houdende diverse tijdelijke en structurele bepalingen inzake justitie in het kader van de strijd tegen de verspreiding van het coronavirus COVID-19 / loi du 20 décembre 2020 portant des dispositions diverses temporaires et structurelles en matière de justice dans le cadre de la lutte contre la propagation du coronavirus COVID-19) (the “Act of 20 December 2020”), which entered into force on 24 December 2020, are somewhat stricter than before.
In this contribution, we will first go over the new rules and then explain why these measures are stricter than before.
THE NEW RULES
1. General meeting via electronic means of communication without a provision in the articles of association.
The managing body of a private limited liability company (BV/SRL), cooperative limited liability company (CV/SC), a public limited liability company (NV/SA), an association (VZW/ASBL), and an international association (IVZW/AISBL) can offer shareholders, members, and other persons entitled to attend, to participate remotely in the general meeting via an electronic means of communication without the need for a provision in the articles of association.
To this end, articles 5:89 (BV/SRL), 6:75 (CV/SC), and 7:137 (NV/SA) of the Belgian Code of Companies and Associations (“BCCA”) were amended and new articles 9:16/1 (VZW/ASBL) BCCA and 10:7/1 (IVZW/AISBL) BCCA were introduced.
Minimum requirements for the electronic means of communication
The electronic means of communication used must:
- allow for verification of the capacity and identity of the participant using it.
- enable the participant at least to take direct, simultaneous, and uninterrupted notice of the discussions at the meeting and, insofar as applicable to that participant, to exercise the right to vote concerning all points on which the meeting is required to make a decision.
- enable the participant to participate in the deliberations and to ask questions.
Until 30 June 2021, electronic means of communication may also be used which do not allow participants to take part in the deliberations and ask questions insofar as the managing body justifies in the convocation why the company/association does not have an electronic means of communication at its disposal that allows this. In such a case, if the participant wishes to participate in the deliberations and ask questions, he must physically attend the general meeting.
Importance of the convocation and the website.
The managing body must include in the convocation a clear and precise description of the procedures relating to remote participation. These procedures must also be mentioned on the company’s/association’s website.
Choice of electronic means of communication.
A sophisticated electronic means of communication with access code is not mandatory and is unnecessary for general meetings with a limited number of participants where the participants know each other.
Tele- and video conferencing applications such as Teams, Zoom, Skype, or similar systems or even a telephone call with several participants are sufficient as long as the above requirements can be met.
Who can participate remotely?
All participants in the general meeting, including the directors and the statutory auditor, if any, can take part in the general meeting electronically, except for the members of the bureau.
If technical problems occur during the general meeting, they must be recorded in the minutes of the general meeting.
2. Written general meeting and remote voting in advance of the general meeting possible for associations (VZW/ASBL) and international associations (IVZW/AISBL)
The possibility of remote voting in advance of the general meeting has been introduced for the associations (VZW/ASBL) and the international associations (IVZW/AISBL). However, this requires a provision in the articles of association, as is also the case for the NV/SA, CV/SC, and BV/SRL.
Finally, for the associations (VZW/ASBL) and the international associations (IVZW/AISBL), it is now also possible to hold a purely written general meeting, just like in the BV/SRL, CV/SC, and NV/SA. All members must then sign these written resolutions for approval. This method is open to all general meeting resolutions except amendments to the articles of association.
WHY THE REGULATION IS STRICTER THAN BEFORE.
Several commentators present the change in the law as a flexibilization that makes it possible to hold a general meeting by tele- and/or videoconference for companies that do not have a provision on this in the articles of association. This view cannot be followed.
The legislator had previously indicated that the requirements set out in (the previous versions of) articles 5:89 (BV/SRL), 6:75 (CV/SC) and 7:137 (NV/SA) BCCA did not apply to general meetings held using tele- and/or video conferencing, and that these were therefore already valid insofar as they complied with the general principles applicable to general meetings.
When RD nr. 4 was introduced, the following was considered in the article-by-article discussion:
“Articles 5: 89 (BV/SRL), 6: 75 (CV/SC) and 7: 137 (NV/SA) BCCA do not deal with meetings via video or telephone conferences with a limited number of persons, where everyone knows and can identify each other, and which count as actually held meetings (no unanimity is required, as for a written meeting).
Meetings via video or telephone conferences with a limited number of persons remain perfectly possible. The general principles that apply to general meetings stipulate that for a meeting to be valid, the shareholders or members must be able to deliberate, speak and exercise their voting rights. The implementation of these principles is also possible by telephone or video link, combined with e-mail for the exchange of written documents.”
(Free translation of the Dutch version of the text)
Because the Act of 20 December 2020 now includes general meetings by video or telephone conference among those referred to in articles 5: 89 (BV/SRL), 6:75 (CV/SC) and 7:137 (NV/SA) BCCA, this Act implies a tightening of the rules for general meetings using tele- and/or videoconference.
After all, under the general principles applicable to general meetings, a general meeting at which the members of the bureau did not meet physically was possible, and article 6 of RD nr. 4 also provided for this possibility. The requirement for the members of the bureau to meet physically is somewhat strange since, given the COVID-19 pandemic, as many contacts as possible should be avoided.
The reason given in the preparatory works for this mandatory physical presence, namely that the members of the bureau should sign the minutes, is not conclusive. After all, the shareholders who can participate remotely must also sign the attendance list, which apparently can still be exchanged by e-mail.
As far as this is possible under the articles of association, one could opt to have one person perform the various tasks of the bureau to still retain the possibility of all the participants participating remotely.
Finally, the question can also be asked as to why electronic participation cannot be made compulsory by the managing body, and certainly for the period when the pandemic is still raging.
Currently, participation via an electronic means of communication is only provided as an option, which may give rise to problems when a person entitled to participate insists on physically participating in the general meeting.
If the managing body also makes use of the temporary provision to use electronic means of communication that do not allow participation in the deliberations or the asking of questions, the persons entitled to participate who do want to exercise those rights are de facto forced to physically participate in the general meeting, which is also not desirable given the pandemic.
Some adjustments to the regulation seem desirable.
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