COVID-19: Decision-making under company law – what can be done remotely? (Part 4)
Further simplifications for shareholders’ and board meetings
In our articles of 24 March and 6 April 2020, we reported on legal simplifications relating to holding meetings for shareholders and members of corporate bodies due to the Austrian COVID-19 Company Law Act (COVID-19-GesG):
1. Remote participation and resolutions passed in alternative ways
Shareholder meetings (such as AGMs but also extraordinary general meetings) and meetings of corporate bodies (especially supervisory and management board meetings) can be held without the physical presence of the participants until the end of 2020. This applies – with the exception of European companies – to all private companies and corporations.
Furthermore, resolutions can generally be passed in alternative ways, which primarily means that resolutions can be passed in written form.
How virtual meetings should be called and held in practice is regulated in the Austrian COVID-19 Company Law Regulation of 8 April 2020 (COVID-19-GesV). As an alternative to the “physical” meeting, each meeting can only take place using video conferencing (acoustic and optical two-way connection in real-time); up to 50% of participants may participate only using audio, especially via telephone. In virtual meetings, participants must be able to make contributions and take part in voting. The statutory and constitutional provisions regarding the calling and holding of meetings (such as deadlines) also apply to virtual meetings, unless alternative rules apply under the COVID-19-GesV.
As the number of shareholders/members is frequently large, the regulation also includes special rules for AGs, cooperatives, and associations. In the case of general meetings of an AG, the notarial protocol obligation must be observed, which the notary can now carry out using suitable video conferencing software:
As certain resolutions and protocols within and outside of general meetings require notarisation, the 4th Austrian COVID-19 Act enables the extension of the use of electronic means of communication to notarial acts. Further information on this can be found in our article of 6 April 2020.
2. Extension of deadline for annual general meetings of AGs, GmbHs and cooperatives
The deadlines for holding an annual general meeting of AGs, GmbHs, and cooperatives have been temporarily extended by 12 months. This should also apply to the passing of circular resolutions instead of holding a general meeting, which is the common procedure at a GmbH for approval of the financial statements, distribution of profits, and discharge from liability of the managing directors.
The law does not contain any explicit provisions as to which financial years shall be covered by the deadline extension. In our view, the extension must apply to all legal entities with a deadline to hold the annual general/general shareholders’ meeting expiring between 22 March and 31 December 2020. Consequently, the extended deadline applies for all financial years with a balance sheet date between 31 July 2019 and 30 April 2020; the annual general/general shareholders’ meetings should be held in any case during the year 2020, as the legal provisions will cease to apply at the end of the year.
3. Non-applicability of periods and deadlines set out in AoA
If the articles of association (bylaws, charters, statutes, deeds of foundation) of the legal forms listed in Sec. 1 (1) COVID-19-GesG stipulate periods or deadlines for specific meetings, these meetings may be held at any later date in the year 2020. According to legislative interpretation, this temporary suspension of deadlines not only applies to deadlines on holding meetings, but also to deadlines on calling meetings. This however only affects such periods and deadlines which deviate from the statutory deadlines under company law (e.g. for calling an extraordinary general meeting).
Finally, the decision on when the mandatory meeting should be held is at the discretion of the respective company body (or its chair). Given the new possibility of remote participation in meetings as well as the possibility for resolutions to be passed remotely, postponing the meetings of corporate bodies may no longer be appropriate.
4. Quarterly meetings of supervisory board
In accordance with Sec. 94 (3) Austrian Stock Corporation Act (AktG) and Sec. 24d (3) Austrian Limited Liability Company Act (GmbHG), supervisory board meetings must be held four times each year, once each quarter.
Until 30 April 2020, it was not necessary to hold supervisory board meetings of a GmbH, AG or cooperative, if this was not feasible. From 1 May, these meetings must once again take place on a quarterly basis – taking into account the simplifications described above (see Point 1).
PwC Remote Meeting Room
If you do not have the technical capacities – beyond a laptop, camera and microphone – to hold a meeting without physical participation, or if you are unable to arrange these at short notice, we have developed a Remote Meeting Room together with PwC’s IT experts which fulfils the video conferencing requirements. This allows you to quickly hold supervisory board meetings or annual general and general shareholders’ meetings during this crisis period. The special requirements of a remote meeting – as in the case of the obligatory participation of a notary (where applicable) – are subject to the implementation regulation on the COVID-19-GesG.
Links to Austrian laws, regulations and decrees
Decree of minister of justice on COVID-19-GesV of 8 April 2020 (GZ 2020-0.223.429)
We are available at any time to answer questions about holding meetings, in particular the use of the PwC Remote Meeting Room!