20 April 2020 – need2know
The COVID Company Law Act and its implementing regulation (“COVID-19-GesV”) bring long-awaited simplifications, in particular for virtual assemblies of stock corporations and limited liability companies and their corporate bodies.
The simplifications also apply to meetings of shareholders and bodies of other corporations (such as SE), partnerships, cooperatives, private foundations, associations, mutual insurance companies, small insurance companies or savings banks. This article provides an outline of the virtual supervisory board meeting, the virtual general meeting of Austrian limited liability companies and the virtual general meeting of Austrian stock corporations.
1. Virtual meeting of the Supervisory Board
According to COVID-19-GesV, a virtual meeting of the supervisory board is permitted if it is possible to participate in the meeting from any location by means of an audio and visual two-way connection in real time. Every participant must have the opportunity to speak and participate when voting.
If individual supervisory board members do not have the necessary hardware for an audio-visual connection to the virtual meeting, it is sufficient if these supervisory board members are only connected by audio to the meeting so long as no more than half of the supervisory board members are connected in this way. The participants who are only connected by audio shall be deemed participants in every respect. They shall also be counted in the determination of any quorum of presence.
The chairman of the supervisory board decides whether a virtual meeting should be held and by which technical means it should be carried out.
2. Virtual General Assembly of Austrian Limited Liability Companies
Like supervisory board meetings, virtual general meetings are also permitted for limited liability companies. The management must decide whether and in what form a virtual meeting should take place. Both the interests of the company (e.g. in a structured course of the meeting) and the shareholders (e.g. available hardware/software at the shareholders’ premises) must be taken into account. The invitation to the virtual general meeting shall specify the organisational and technical requirements for participation.
If the involvement of a notary is required for the measures to be resolved (e.g. to amend the articles of association of a limited liability company, Sec. 49, Subsection 1, Austrian Act on Limited Liability Companies), this can be done in in accordance with § 69b of the Notarial Regulations Act.
3. Virtual Annual General Meeting of Stock Corporations
a) General Simplifications
The annual general meeting of a stock corporation differs from other meetings primarily in the typically larger circle of participants. A conventional video conference is therefore not really suitable for holding general meetings.
According to COVID-19-GesV, it is therefore sufficient if shareholders can follow the virtual general meeting by visual and audio means, but not directly speak or vote. However, these rights must be granted to them “in another way” during the meeting: For example, the right to information and the right to make a motion at the shareholders meeting (Sec. 118 and 119 Stock Corporations Act („AktG“)) could be exercised in such a way that the shareholders send their questions or motions in writing to the company electronically within a certain time window during the meeting, which then is read out by the chairman. Special voting software could also be used for voting. Shareholders who are able to exercise their rights in this way are in any case participants in the sense of stock corporation law and must therefore be included in the list of participants.
In this context, it is essential that shareholders have the opportunity to react to actions at the meeting (e.g. by an alternative resolution proposal or an additional question). As with any general meeting, however, it is also possible to structure the course of a virtual meeting in terms of time including, for example, to announce a specific time by which questions can be asked.
Virtual general meetings are also permissible if individual shareholders are only able to follow the meeting by audio (subject to a half clause, see above supervisory board meetings). In order to enable an even larger group of shareholders to follow the general meeting, listed stock corporations can also broadcast the general meeting without a corresponding provision in the articles of association. Voting by letter can also be provided for, even without authorization in the articles of association.
The Company is only responsible for the use of technical means of communication to the extent that these are attributable to it.
b) Additional Simplifications for “large” Companies
For listed companies, MTF issuers (e.g. Vienna MTF of Vienna Stock Exchange) and companies with more than 50 shareholders, the following simplifications also apply:
- The annual general meeting shall be transmitted by audio-visual means in real time (transmission of the annual general meeting).
- The exercise of shareholder rights (filing motions for resolutions, voting and raising an objection) can be “channeled” in the virtual annual general meeting via proxies. For this purpose, the company must propose at least four suitable and independent persons as proxies, at least two of whom must be lawyers or notaries. The costs of the special proxies shall be borne by the company. Shareholders must authorize one of these proxies to attend the annual general meeting.
- With regard to the shareholders’ right to information, the company may determine that questions must either be asked via the proxies and/or addressed directly to the company. Electronic means (such as e-mail) must be provided for this purpose.
The organisational and technical requirements for participation in the virtual general meeting must always be stated in the notice convening the meeting. However, it may also be stated in the invitation that this information will be made available on the company’s website entered in the commercial register (otherwise permitting circulation at the registered office and transmission upon request, Sec. 108 (3) to (5) Stock Corporation Act). The documents must then be available from the 21st day before the annual general meeting.
If a company has already published the convening notice prior to the announcement of the COVID-19-GesV (i.e. before 8 April 2020), it is sufficient if the information for the virtual general meeting is only provided from the 14th day prior to the general meeting.
Please note that the information provided here is not a substitute for legal advice. The regulations presented here can be changed by the legislator at short notice. We therefore invite you to visit our information area on a regular basis.
Authors: Elke Napokoj, Stefan Gaug, Christoph Nauer, David Pukel
Corporate / M&A
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