Covid 19 and alternative meeting options update RD 9 April 2020
Alternative meeting options: don't let corona paralyze your general meeting or management body
Update RD no. 4 of 9 April 2020[1]
The beginning of spring traditionally also heralds the season of the annual general meetings. However, in times of Covid-19 threat it is in most cases not appropriate to organize a physical general meeting and for the time being the corona measures don’t even allow this. The same applies to board meetings.
However, this does not mean that the bodies of your company or association can no longer meet and decide during the corona crisis. In our newsletter of 8 April 2020 we informed companies (I) and associations (II) about the legally permitted alternatives to a physical meeting of both the general meeting and the management body. In this newsletter we supplement the information provided earlier with the temporary COVID-19 scheme based on Royal Decree no. 4 of 9 April 2020 (RD). The newly added information has been marked in bold.
Temporary COVID-19 scheme
The RD implements a temporary scheme which provides for a number of relaxations and options for the organisation of general meetings or meetings of management bodies. This regime is, however, not compulsory, so companies and associations that do not wish to make use of it must still comply with the ordinary rules.
For which legal entities?
The RD applies to all companies, associations and other legal entities (additionally) subject to company or association law, as well as to legal entities having legal personality on the basis of special legislation. The RD therefore also provides the necessary flexibility for e.g. legal entities governed by public law.
During which period?
The end date of the RD is 3 May 2020, extendable in function of the further evolution of the coronavirus pandemic. It also responds to the uncertainty that has prevailed so far, as it applies retroactively from 1 March 2020.
In concrete terms, this means that it applies to any meeting of the governing bodies which
- has already been convened; or
- has yet to be convened; or
- should have been held, but was not held; or
- has yet to be held
between 1 March 2020 and (provisionally) 3 May 2020.
Meetings convened before (provisionally) 3 May 2020 may be held according to this scheme even if they take place after this date.
Please note that meetings already held between 1 March 2020 and 9 April 2020 according to the ordinary rules, are excluded from the scope of application.
For which meetings?
The RD applies to all meetings of the management body and to all general meetings. Not only the annual, ordinary general meeting, but also a special or extraordinary general meeting is therefore covered.
I. Companies
General meeting of shareholders
Remote meetings
Shareholders of a BV/SRL, CV/SC and NV/SA can validly participate in the general meeting remotely via an electronic means of communication if this possibility is explicitly included in the articles of association. In doing so, the shareholders must at least be able to follow the meeting directly and simultaneously and exercise their voting rights, for example by tele- or videoconference. Shareholders may also vote by letter or by electronic means prior to the general meeting, again if this possibility is explicitly provided for in the articles of association.
However, the CCA does not allow the directors and the statutory auditor(s) to participate remotely in the general meeting. They should therefore be asked to waive the convening formalities and the right to claim the annulment of the decisions.
Due to the current exceptional circumstances and in the interest of the company, we consider it justifiable to organize a general meeting remotely, even if this possibility is not provided for in the articles of association. However, it is important to ensure that all shareholders have the opportunity to participate and that an effective and interactive debate can take place. It is also important to thoroughly justify the choice of a remote general meeting with a reference to the corona measures and to carefully minute the discussions and voting.
Written general meeting
There is also a possibility to meet without any form of physical meeting: the written general meeting. It suffices for each shareholder to sign the proposed resolution in writing for approval, without prior debate. Under the CCA, the board does not have to comply with the formalities for convening the general meeting in this case. In addition, the members of the board and the statutory auditor(s) do not have to be convened, but at their request they can consult the decisions taken.
The possibility of a written general meeting should not be provided for in the articles of association. There are, however, a number of important limitations to this working method. The most important one: unanimity is required, so all shareholders must agree and confirm their agreement in writing. A written general meeting is also excluded for resolutions that must be taken before a civil law notary, e.g. an amendment to the articles of association.
Decisions on the approval of the annual accounts and the granting of discharge to the directors do not require an authentic deed and can therefore be validly taken by a written general meeting.
Temporary COVID-19 scheme
The management body has two options: to organise an adjusted general meeting or to postpone the general meeting.
Adjusted meeting
The management body may decide that shareholders shall only be offered the choice between voting remotely before the general meeting and voting by proxy, even if the articles of association do not provide for such possibilities.
Remote voting takes place in accordance with the rules in the articles of association and, in the absence thereof, in accordance with the procedure provided for the NV/SA: by letter or via the company’s website, using a form made available by the company.
The management body may impose that proxies may only be granted to a person designated by it. However, the sole proxy holder may only vote if specific voting instructions have been given on each item on the agenda. However, valid proxies with specific voting instructions already received shall remain valid and the proxy holder concerned is not required to be physically present.
Voting forms and proxies must be sent to the company. This may be done by e-mail and a scanned or photographed version is sufficient. The management body may impose that these documents must reach the company no later than the fourth day before the meeting; in listed companies this is mandatory.
The management body can also decide that the shareholders can participate in the shareholders' meeting remotely via a legally defined electronic means of communication, even without permission under the articles of association. The shareholders must at least be able to follow the meeting directly and simultaneously and exercise their voting rights.
The management body may prohibit any physical presence if it is unable to guarantee compliance with the corona measures. The directors, statutory auditor(s) and, as the case may be, the appointed proxy holder may participate in the meeting remotely, for example by means of tele- or videoconference. For decisions that have to be adopted before a civil law notary, the physical presence of only the civil law notary and one director (in case of remote voting) or the sole proxy holder is sufficient.
The shareholders' right to ask questions remains, but can be organised differently. The management body may decide that only written questions are allowed. The management body may also require the shareholders to ask their questions in writing no later than the fourth day prior to the meeting. The management body answers the questions in writing at the latest prior to the vote, or orally during the remote meeting by, for example, tele- or videoconference.
Convening notices that have already been published or sent out may be adapted to the aforementioned more flexible rules and the place of the general meeting that is determined herein may be changed, without the ordinary convening formalities. However, it is necessary that the shareholders are correctly informed, for example by e-mail or the company's website.
Postponement
The second option is to postpone the general meeting, even if it has already been convened. Again, the shareholders must be correctly informed. The postponed meeting then constitutes an entirely new meeting, subject to the ordinary rules.
If the annual, ordinary general meeting is postponed, also a number of related deadlines are extended by ten weeks. It concerns the obligation to hold the general meeting within six months of the closing of the financial year and the obligation to file the annual accounts within seven months of the closing of the financial year. For companies with a financial year according to the calendar year, these extended periods therefore end on 8 September and 9 October 2020 respectively.
Attention: no postponement is allowed in case of application of the alarm bell procedure in case of negative or imminently negative net assets, or in case of a convocation of the general meeting at the request of the statutory auditor or at least 10% of the shareholders.
Management body
Remote meetings
No special rules apply to the management body of a BV/SRL, CV/SC and NV/SA, unless such rules are included in the articles of association or internal regulations. Provided that an effective and simultaneous deliberation is guaranteed, nothing prevents the management body from meeting remotely, for example by tele- or videoconference. It is not required that this possibility is provided for in the articles of association.
Written decision-making
The management body may also decide unanimously in writing without a physical meeting, with the exception of decisions for which the articles of association would exclude this possibility. Contrary to what was the case before the entry into force of the CCA, written decision-making is now no longer subject to the conditions of urgent necessity and the interest of the company. Important: if the articles of association of the company have not yet been adapted to the CCA and would still contain restrictions on written decision-making, these restrictions will have to be complied with.
Temporary COVID-19 scheme
Irrespective of the provisions in the articles of association on this point, the management body may decide by unanimous written consent, or deliberate and decide (unanimously or by majority) by electronic communication which enables discussion, for example by tele- or videoconference.
For decisions to be taken before a civil law notary, a physical meeting remains required, but only of the civil law notary together with one member of the management body or a person authorised by it. The other members of the management body may participate remotely by electronic communication.
II. (International) associations
General meeting of members
For (international) not-for-profit organisations, the legislator has not laid down any special rules, neither for a remote general meeting nor for a written general meeting.
Remote meetings
For (international) associations, a remote general meeting is in most cases considered as the preferred alternative.
A remote general meeting is in any case allowed if this is provided for in the articles of association.
If a remote general meeting is not provided for in the articles of association, it is in principle not possible to hold the general meeting remotely. However, in the same way as for companies, we consider a remote meeting to be justifiable in these special circumstances provided that a number of conditions are met. A minimum requirement is that all members have the opportunity to participate in the meeting and that an effective and interactive debate can take place. Again, the motto is: justify the choice for a remote general meeting thoroughly and carefully minute the discussions and voting.
Written general meeting
The law does not provide for the possibility of a written general meeting but, analogous to the CV/SC, it can be argued that general meetings of not-for-profit organisations (vzw/asbl) can also unanimously decide in writing provided the articles of association allow for this possibility. Taking into account that for not-for-profit organisations (vzw/asbl) the law requires that, in addition to the members, also the directors and statutory auditor(s) have to be convened for a general meeting, it is recommended to request the directors and statutory auditor(s) to waive the convening formalities and the right to claim the annulment of the decisions. For international not-for-profit organisations (ivzw/aisbl), a unanimous written decision of the members is in any case possible if this is provided for in the articles of association.
Written meetings without explicit authorization in the articles of association are in principle not recommended. A workable solution justifiable in the interest of the association, could consist of a unanimous waiver by all members of the convening formalities and the right to claim the annulment. Once again, it must be ensured that in a not-for-profit organisation (vzw/asbl) also the directors and statutory auditor(s) sign such waiver.
Temporary COVID-19 scheme
The management body has two options: to organise an adjusted general meeting or to postpone the general meeting.
Adjusted meeting
The management body may decide that members shall only be offered the choice between voting remotely before the general meeting and voting by proxy, even if the articles of association do not provide for such possibilities.
Remote voting takes place in accordance with the rules in the articles of association and, in the absence thereof, in accordance with the procedure provided for the NV/SA: by letter or via the association’s website, using a form made available by the association.
The management body may impose that proxies may only be granted to a person designated by it. However, the sole proxy holder may only vote if specific voting instructions have been given on each item on the agenda. However, valid proxies with specific voting instructions already received shall remain valid and the proxy holder concerned is not required to be physically present.
Voting forms and proxies must be sent to the association. This may be done by e-mail and a scanned or photographed version is sufficient. The management body may impose that these documents must reach the association no later than the fourth day before the meeting.
The management body can also decide that the members can participate in the meeting remotely, by a legally defined electronic means of communication, even without permission under the articles of association. The members must at least be able to follow the meeting directly and simultaneously and exercise their voting rights.
The management body may prohibit any physical presence if it is unable to guarantee compliance with the corona measures. The directors, statutory auditor(s) and, as the case may be, the appointed proxy holder may participate in the meeting remotely, for example by means of tele- or videoconference. For decisions that have to be adopted before a civil law notary, the physical presence of only the civil law notary and one director (in case of remote voting) or the sole proxy holder is sufficient.
The members’ right to ask questions remains, but can be organised differently. The management body may decide that only written questions are allowed. The management body may also require the members to ask their questions in writing no later than the fourth day prior to the meeting. The management body answers the questions in writing at the latest prior to the vote, or orally during the remote meeting by, for example, tele- or videoconference.
Convening notices that have already been published or sent out may be adapted to the aforementioned more flexible rules and the place of the general meeting that is determined herein may be changed, without the ordinary convening formalities. However, it is necessary that the members are correctly informed, for example by e-mail or the association’s website.
Postponement
The second option is to postpone the general meeting, even if it has already been convened. Again, the members must be correctly informed. The postponed meeting then constitutes an entirely new meeting, subject to the ordinary rules.
If the annual, ordinary general meeting is postponed, also a number of related deadlines are extended by ten weeks. It concerns the obligation to hold the general meeting within six months of the closing of the financial year and the obligation to file the annual accounts within seven months of the closing of the financial year. For associations with a financial year according to the calendar year, these extended periods therefore end on 8 September and 9 October 2020 respectively.
Attention: no postponement is allowed in case of a convocation of the general meeting at the request of the statutory auditor or of at least one fifth of the members.
Management body
Remote meetings
No special rules apply to remote meetings of boards of directors of (international) associations. Therefore, the same applies as for companies: unless prohibited by the articles of association, the board can meet remotely provided an effective and simultaneous deliberation is guaranteed (for example by means of tele- and videoconferencing).
Written decision-making
The management body of a not-for-profit organization (vzw/asbl) may unanimously decide in writing without a physical meeting, except for decisions for which the articles of association would exclude this possibility. Please note that if the articles of association of a not-for-profit organization have not yet been adapted to the CCA and still contain restrictions on written decision-making, these restrictions must be complied with.
As far as international not-for-profit organizations (ivzw/aisbl) are concerned, written decision-making is possible if this is provided for in the articles of association. If this is not provided for in the articles of association, it is recommended that the directors unanimously waive the convening formalities and the right to claim the annulment of the decisions.
Temporary COVID-19 scheme
Irrespective of the provisions in the articles of association on this point, the management body may decide by unanimous written consent, or deliberate and decide (unanimously or by majority) by electronic communication which enables discussion, for example by tele- or videoconference.
If you have any questions about the meeting facilities of your company or (international) association, you can contact the Curia Corporate and Non-profit team: Yvette Verleisdonk, partner (yvette.verleisdonk@curia.be) and Sarah Verschaeve, partner (sarah.verschaeve@curia.be).
[1] RD nr. 4 dated 9 April 2020 containing various provisions regarding co-ownership and regarding the legislation on companies and associations in the framework of the battle against the Covid-19 pandemic, B.S.G. 9 April 2020.