Vienna. Stock corporations can now hold their general meetings purely virtually. This was decided as part of the Covid-19 legislative package, it will initially apply until the end of this year. But what does that mean for companies and shareholders?
“Even in the pre-Corona period, the articles of association of the AG could provide for shareholders to participate in general meetings electronically,” says Helmut Schmidt, partner at Scherbaum Seebacher Rechtsanwälte. Up to now, however, a face-to-face event had to take place – that's different now.
And it may stay that way even after Corona – because the virtual general meeting could well become part of the permanent legal status. Then the companies would also have this option in the future. The essential prerequisite for this is, of course, a functioning technology: “The law requires an optical and acoustic two-way connection in real time,” says Schmidt.
Every participant must be able to speak and take part in votes – with certain limits, of course. “For example, time limits can be set for the submission of requests to speak during the meeting. And it does not have to be given the opportunity to speak up immediately, ”says Schmidt.
Circumcision of rights?
Typically, this is regulated in such a way that the shareholders have to submit their written questions or applications electronically – i.e. in writing – to the company in a time window during the meeting. It can also be provided that resolutions, votes and the raising of objections are to be handled by a proxy who is called in by the company. Nevertheless, the shareholder then has the right to exercise his right to information himself – that is, he can submit his questions directly to the company.
But should that really become a permanent solution? Shareholder representatives sometimes fear that it will undermine shareholders' rights if they can no longer ask, discuss and argue face to face. On the other hand, you save yourself a possibly arduous journey. This could also motivate shareholders who never attend face-to-face events to participate.
What applies to malfunctions?
And what if the technology plays a trick on the participants? “Society is only responsible for the use of the technical means of communication it has chosen to the extent that it falls within its sphere of influence,” says Schmidt. It also deals with the question of whether resolutions are valid. “Communication disruptions during a virtual meeting only lead to the risk of a resolution being challenged if the company is at fault in this regard,” says the lawyer.
Not only bad internet connections but also temporary blockages of the IP addresses of individual shareholders could lead to problems. Lock files can create clarity through which it is possible to trace in a manipulation-proof manner which shareholders have logged in or out and when. For reasons of evidence, the entire course of the general meeting should also be documented in a tamper-proof PDF file.
Schmidt is convinced that it should be possible to compensate for the additional costs initially incurred through technical support through savings in the area of room rental, catering, etc.
He considers rules that limit the time to speak to be quite sensible: It is worth considering limiting the right of each shareholder to ask questions to around ten to 15 minutes. “But you can also think of regulating the speaking time of the chairman.”
And when are shareholder rights actually in danger? “It becomes questionable if the possibility for shareholders to react to current developments at the Annual General Meeting is excluded or factually impossible,” says the lawyer. Especially if there is only one right to ask questions in writing, which ends before the start of the general meeting.