Alternative meeting options of the general meeting and other novelties
Introduction
In this newsletter, we discuss the amendments introduced by the Act of 20 December 2020 to the Code of Companies and Associations ('CCA') regarding the possibility of holding general meetings of companies and (international) associations. Thereafter, we explain the scope of the Constitutional Court's judgment of 15 October 2020, which annulled a provision of the CCA regarding the internal rules. Finally, we reiterate the situation of existing CVBAs/SCRLs and the impact of the Remedial Act of 28 April 2020 thereon.
1. Alternative meeting options of the general meeting
In a previous newsletter (which you can find here), we guided you through the temporary COVID-19 scheme based on Royal Decree no. 4 of 9 April 2020. However, this regulation only applied to meetings convened or held between 1 March and 30 June 2020.
Given that Covid-19 is more persistent than first thought, there was a need for a legislative initiative to deal with the uncertainty that remote meetings entailed.
The Act of 20 December 2020 containing various temporary and structural provisions relating to justice in the context of the fight against the spread of the COVID-19 coronavirus (hereinafter the 'Act of 20 December 2020') has, amongst others, amended the CCA. The amendments have an impact on the organisation of and the participation in the general meeting. These amendments entered into force on 24 December 2020. Curia lists the most important changes for companies and (international) associations for you.
Remote general meeting
Companies
For the general meetings of BVs/SRLs, CVs/SCs and NVs/Sas the CCA already included the possibility to participate remotely in the general meeting via an electronic means of communication provided by the company if the articles of association so provided. Based on the Act of 20 December 2020, every BV/SRL, CV/SC and NV/SA can now organise a general meeting via an electronic means of communication even without a statutory authorisation.
(International) associations
The CCA did not yet explicitly provide for the possibility of organising a remote meeting for (international) associations. The Act of 20 December 2020 now also includes this possibility for (international) associations.
Requirements for remote meetings of companies and (international) associations
A remote general meeting of companies and (international) associations must meet the following conditions:
· The decision to organise a remote general meeting belongs to the management body.
· The electronic means of communication provided by the company or association (e.g. a video or telephone conference via Teams, Zoom, Skype or a similar system) shall allow the company or association to verify the capacity and identity of the shareholder (or any other holder of securities entitled to attend) or member using it.
· The electronic means of communication shall at least enable shareholders or members to directly, simultaneously and uninterruptedly follow the discussions at the meeting and, where they have the right to do so, to exercise their voting rights on all items on which the meeting is required to take a decision. The electronic means of communication shall also enable them to participate in the deliberations and to ask questions.
Ø If the company or association does not possess an electronic means of communication that enables shareholders or members to participate in the deliberations and ask questions, the management body needs to motivate in the convening notice for the general meeting why it does not have such electronic means of communication at its disposal. Please note that this leniency will only apply until 30 June 2021.
· The convening notice for the general meeting should include a clear and precise description of the procedures relating to remote participation. In case the company or association has a website, these procedures should be made accessible to those entitled to participate in the general meeting on that website.
· The minutes of the general meeting shall record any technical problems and incidents that prevented or disrupted participation by electronic means in the general meeting or the voting.
· Attention: The members of the bureau of the general meeting cannot participate in the general meeting by electronic means.
Ø There is no legal definition of the ‘bureau’. Moreover, the CCA does not contain an explicit obligation to appoint a bureau of the general meeting. The preparatory works state that the members of the bureau are the persons who sign the minutes of the general meeting and who, on behalf of the company or association, take responsibility for the valid composition of the meeting held remotely. Based on the changes introduced by the Act of 20 December 2020 in the CCA, there now seems to be an implicit obligation to appoint a ‘bureau’ at a general meeting. However, it is perfectly conceivable that the bureau consists of only one person, namely the person who is chairing the meeting and is authorised to sign the minutes.
Ø It should be noted that prior to the Act of 20 December 2020, in companies, besides the members of the bureau, also the members of the management body and, if applicable, the statutory auditor, could not participate by electronic means. This restriction is only maintained for the members of the bureau of the general meeting.
Written general meeting
Companies
Pursuant to the Act of 20 December 2020, the shareholders may unanimously and in writing take all decisions that fall within the powers of the general meeting, with the exception of amendments to the articles of association. Previously, the CCA already provided for this possibility, but the exception existed in resolutions that need to be executed by means of a notarial deed.
In the case of written decision-making, the convening formalities do not have to be complied with.
The members of the management body, the statutory auditor and the holders of convertible bonds, subscription rights or certificates issued with the cooperation of the company may, at their request, take note of such resolutions.
(International) associations
This possibility of written decision-making has also been introduced for (international) associations. Just like for companies, the written decision-making can only be applied if the following cumulative conditions are met:
· All members must agree to this working method and decisions need to be taken by unanimous consent.
· Written decision-making is not allowed in case of an amendment of the articles of association.
The members of the management body, and in large (international) associations, also the statutory auditor, may take note of these decisions at their request.
For international associations, this legislative change largely limits their contractual freedom. Prior to the Act of 20 December 2020, nothing prevented international associations from providing in their articles of association for a procedure of written decision-making without the requirement of unanimity of all members. Especially for international associations with a large number of members, this possibility of unanimous written decision-making is only a theoretical option since it will be extremely difficult, if not impossible, to obtain the written consent of all members.
Casting a remote vote in advance of the meeting
The Act of 20 December 2020 also provides that any shareholder or member may vote remotely by electronic means in advance of the general meeting, under the condition that this possibility is provided for in the articles of association and in accordance with the modalities set out therein.
This arrangement was already provided for in the CCA for companies and will remain unchanged after the Act of 20 December 2020. New is that this statutory possibility is introduced for (international) associations.
If the company or (international) association allows for remote voting by electronic means, it must be able to verify the capacity and identity of the shareholder or member in the manner provided for in or pursuant to the articles of association.
Although this is not explicitly stated in the law for (international) associations, we are of the opinion that in addition to electronic voting, written votes may also be cast in advance of the general meeting, under the condition that it is provided for in the articles of association.
2. Judgment of the Constitutional Court of 15 October 2020
In its judgment of 15 October 2020, the Constitutional Court decided on the partial annulment of article 2:59 of the CCA. This provision provides for the possibility for the management body to issue internal rules, provided that it has been authorized to do so by the articles of association. Traditionally, many cooperative companies and associations have internal rules, the provisions of which are not made public. In addition, internal rules (as opposed to, for example, a shareholders' agreement) are binding on the company or association. In particular, the Court annulled article 2:59, section 1, 3° CCA. The annulled provision stated that the internal rules could not contain any provisions that would affect the rights of the partners, shareholders or members, the powers of the bodies, or the organisation and operation of the general meeting.
With this judgment, the Constitutional Court addressed the unequal treatment between cooperative companies and other legal forms. For the CV/SC, it was always the case that the internal rules could contain provisions that affect the rights of the partners, shareholders or members, the powers of the bodies, or the organisation and operation of the general meeting. The Court ruled that this discrepancy between the CV/SC and other legal forms was not objectively and reasonably justified. The consequence of this judgment is that from now on internal rules for all companies and (international) associations may contain provisions that affect the rights of the partners, shareholders or members, the powers of the bodies or the organisation and operation of the general meeting. However, this is only possible on the condition that the internal rules have been approved by a decision adopted by the general meeting, taken in accordance with the quorum and majority requirements applicable for an amendment of the articles of association.
We wish to point out that according to article 2:59, section 1, 2° CCA, the internal rules still cannot contain provisions on matters for which the CCA requires a statutory provision. However, there is still an exception to this for a CV/SC, which, unlike other companies and (international) associations, can include provisions in its internal rules on matters for which a statutory provision is required. The Constitutional Court has stated that it is up to the legislator to put an end to this discrepancy.
3. ‘unreal' or 'real' CV: a world of difference for your CVBA/SCRL
In a previous newsletter (which you can find here), we informed you about the obligation of the management body of a CVBA/SCRL that already existed before the entry into force of the CCA to take a decision as soon as possible (preferably before 1 January 2020) whether the company met the legal definition of a cooperative company as set out in the CCA (a so-called 'real' CV/SC).
If the company was a real CV/SC, it could continue as a CV/SC and use the name CV/SC (even if the articles of association had not yet been brought in line with the CCA). In that case, the fully paid-up fixed part of the capital and the legal reserve of the CV/SC were automatically converted into a statutory unavailable equity account on 1 January 2020. In addition, the CV/SC was subject to the mandatory rules of the cooperative company as included in the CCA.
If the management body decided that the CVBA/SCRL did not meet the legal definition of a cooperative company under the CCA (an 'unreal CV/SC'), it had to continue to exist as a CVBA/SCRL and use the name CVBA/Scrl until it was converted into a BV/SRL and was subject to the mandatory rules of the private limited liability company under the CCA. The Remedial Act of 28 April 2020 also clarified that, for these unreal CVs/SCs, the fully paid-up fixed part of the capital and the legal reserve was not converted by operation of law into a statutory unavailable equity account. This means that the 'unreal' CVs/SCs (CVBAs/SCRLs) can continue to make use of fixed and variable capital until their conversion into a BV/SRL.
In practice, Curia has noticed that the management bodies of a number of 'old' CVBAs/SCRLs have not yet taken the decision whether they are a 'real' or 'unreal' CV/SC. As long as this decision has not been taken, the company risks using the wrong name and applying the wrong rules. It is therefore important (and the task and responsibility of the management body) to do so. For the sake of clarity, the decision does not have to be accompanied by an amendment of the articles of association. This only has to take place on 1 January 2024 at the latest.
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In case of questions, please contact the Curia Corporate and Social and Non-profit team: Yvette Verleisdonk, partner (yvette.verleisdonk@curia.be) and Sarah Verschaeve, partner (sarah.verschaeve@curia.be).