The guiding principle under stock corporation law, according to which general meetings can only be held via online access if a provision in the articles of incorporation also opens up this possibility for the Management Board, is proving to be very inflexible in the current corona crisis. By far not all companies have such authorisation in their articles of association and are capable of acting in this respect.
In detail, the changes resulting from the draft law of 23 March 2020 mean the following major changes for stock corporations:
- The requirements of Section 118 AktG (German Stock Corporation Act) are cancelled.
- The Management Board can therefore decide (even without the corresponding authorization in the Articles of Association) that the meeting (in its entirety if necessary) is to be held as a virtual general meeting without the physical presence of the shareholders or their proxies.
- Video and audio transmission of the entire meeting (including the general debate and voting) must be provided.
- The Management Board decides which questions from shareholders it will answer and how to answer them, based on its own dutiful and free discretion.
- The Board may stipulate that questions must be submitted by electronic communication at least two days before the meeting.
- The Management Board may also provide for questions to be asked online during the Annual General Meeting. This is currently anfechlikely to be ruled out due to technical circumstances. In any case, such online question options would still have to be developed together with AGM service providers.
- It must be possible for shareholders to exercise their voting rights (e.g. by proxy); the extent to which this is also possible online would have to be worked out together with the providers.
- Most recently, the shareholders' right to appeal was also very significantly restricted in this context, unless the company can be proven to have intentionally caused damage.
In addition, the Management Board is now authorized to take the following individual measures:
- The Management Board may decide to convene the general meeting no later than the 21st day before the day of the meeting.
- The Management Board may also decide to pay an advance from the net profit to the shareholders without authorization in the Articles of Association.
- The Management Board may decide that the general meeting shall take place later than within the first eight months of the financial year.
Furthermore, the Supervisory Board may, irrespective of the provisions in the Articles of Association – and thus in deviation from the current provision in Section 108 para. 4 AktG – or the rules of procedure, give its approval to these measures of the Management Board in writing, by telephone or in a comparable manner without the physical presence of the members.
It will now be decisive for companies how they solve the technical challenges in this context. The fact that companies will be able to hold the general meeting online without having to authorize the shareholders in the Articles of Incorporation, and that there will be no need for shareholders to ask questions during the ongoing general meeting, is a considerable relief in this respect.
Many thanks to co-author Maurice Goebel.