How to organise meetings of the shareholders and the board of directors in times of social distancing?

The spread of the Coronavirus has prompted governments worldwide to take extensive measures, following which social gatherings are no longer permitted. In these Corona-times it is discouraged, or even forbidden for shareholders and directors to meet physically. If the current health crisis persists in the coming months, this will also lead to practical problems for many Belgian companies whose financial year-end coincides with the calendar year, namely in the context of their annual obligations to approve the annual accounts.

Therefore, a number of alternative solutions for valid decision-making are briefly set out below, allowing the directors and the shareholders to proceed to deliberation and decision-making without having to hold a physical meeting. In addition, we have been informed that the Belgian government is developing measures to provide additional flexible solutions in the short term for the organisation of the mandatory annual general meeting.

1    ELECTRONIC DECISION-MAKING

1.1    General meeting of shareholders

A first alternative for a physical general meeting of shareholders is organising the meeting by means of telecommunication, whereby the deliberation and the decision-making takes place electronically. The law does not require the physical presence of the participants to the general meeting. As a result, meetings can be organised via (video) teleconferences and web applications (e.g. Starleaf, Microsoft Teams, Google Hangouts, Skype, etc.).

However, in order to make use of electronic deliberation and decision-making, a number of conditions have to be met. First of all, the articles of association of the company must allow electronic decision-making and it is necessary that such means allows for a direct and uninterrupted debate. In addition, it must be possible to confirm the attendance quorum at the start of the meeting, at which moment the company needs to verify the identity of each participant (e.g. by using an e-ID). Before making use of this alternative, it is strongly recommended to check the company's articles of association with respect to the procedure and conditions for the usage of telecommunication.

If provided for in the articles of association, it is also possible for shareholders to cast their votes in advance. This is possible both in writing and electronically, whereby the electronic voting must be verified (e.g. by the use of an e-ID).

The minutes of the meeting must include the manner in which the meeting was held, as well as the number of votes casted for each of the decisions taken and any (technical) difficulties that may have occurred during the electronic deliberation. Since the law does not explicitly mention anything in this respect and therefore does not impose any special requirements, it is in principle possible to sign all the minutes of the meeting with a simple electronic signature.

With respect to the presence of the directors and the statutory auditor (if any) at the annual general meeting, the Belgian Code on Companies and Associations (the BCCA) does not allow their participation by means of telecommunication. Therefore, it is recommended to provide for waivers from the directors and the statutory auditor, in which they waive the convening formalities and their participation to the electronic meeting.

Finally, in case of electronic decision-making, the convening formalities still have to be fulfilled and the invitation to the shareholders to attend the general meeting must explicitly mention the manner in which the meeting will be held.

1.2    The board of directors 

The board of directors can also meet electronically, even if this is not explicitly provided for in the articles of association. The electronic deliberation and decision-making must again allow for a direct and uninterrupted debate.

1.3    Amend the articles of association? 

In the event a company wishes to make use of electronic decision-making but such possibility is not provided for in its articles of association, the company may opt to amend its articles of association in this respect. This however requires an authentic deed to be passed before a Notary Public. 

It is however advisable to first consult with the Notary Public whether such deed to amend the articles of association can be passed in the current crisis situation and taking into account the guidelines issued by the Royal Federation for Belgian Notaries pursuant to the Coronavirus.

2    WRITTEN DECISION-MAKING

2.1    General meeting of shareholders

A second valuable alternative for a physical meeting are the written resolutions. The BCCA provides that shareholders can unanimously adopt in writing all resolutions that fall within the competence of the general meeting, with the exception of those that require an authentic deed. It is therefore not necessary for the articles of association to explicitly provide for the possibility of written decisions.

The unanimity requirement does however entail that it is essential to consult in advance with all shareholders in order to determine whether all shareholders agree with this manner of proceeding.

2.2    Board of directors

The administrative body also has the possibility to take written resolutions. The introduction of the new BCCA has simplified the written decision-making process for the management body, as the previously applicable strict cumulative conditions of urgent necessity and interest for the company have been removed. Under the current legislation, written decisions are therefore always possible for the management body, except if the articles of association provide otherwise. 

However, companies whose articles of association have not yet been adapted to the new BCCA must first check whether their articles of association do not contain any restrictions on the use of written decisions (which would still refer to the abovementioned strict conditions, which were in place before the introduction of the new BCCA). 

3    USE OF PROXIES

3.1    General meeting of shareholders

A third alternative to limit physical contact when holding meetings is the use of proxies. No authorisation in the articles of association is required for the use of such proxies. This means that a shareholder can grant a proxy to another shareholder or a third party to attend the meeting in person and vote on his/her behalf. 

3.2    The board of directors

For meetings of the board of directors, a director can only grant a proxy to another director to attend and vote on the board of directors. 

However, it must always be verified whether the articles of association of the company do not impose any further restrictions with respect to proxies for both the general meeting of shareholders and the board of directors.

4    POSTPONEMENT OF THE ANNUAL GENERAL MEETING?

The annual general meeting can be postponed to a later date in case the Corona-measures remain in force for a long period of time. However, the management body remains responsible for ensuring that the annual general meeting is held within six months of the end of the financial year, risking director’s liability in case of non-compliance. 

5    CONCLUSION

Despite the ban on physical meetings, there are several legal alternatives for valid deliberation and decision-making by the board of directors and the general meeting of shareholders. However, it is important that the company's articles of association are always verified for relevant provisions and that the shareholders and directors are clearly informed about the way in which future meetings will be held. Finally, it remains to be seen what the Belgian authorities will offer as flexible solutions to allow companies to meet their annual obligations in the current circumstances.