We have noticed that in many companies (very) little attention is paid to (annual) general meetings. Sometimes the members of the governing body consider these meetings as a waste of time, with a lot of formalities, without any added value. As a result, statutory or legal rules and deadlines are often not respected. As a result, we found the following shortcomings:
- missing proxies,
- failure to respect the time limits for convening the meeting,
- inaccuracy of the agenda,
- imprecise minutes,
- and so on…
In many cases, the consequence of such breaches is that the validity of the general meeting may be challenged and the liability of the company and/or its governing body may be called into question.
In addition, in recent weeks, legal entities have had to face certain obstacles in the organisation of their general meetings, following the measures taken in the fight against COVID-19 (notably the ban on assemblies).
In this context, we would like to inform you of the recent legal changes affecting the organisation of these meetings. We would also like to take this opportunity to stress the importance of complying with the rules in force.
Indeed, especially during this period of uncertainty, transparent and continuous communication with shareholders is imperative. The annual general meeting is the ideal time to engage in a dialogue with shareholders and to explain the measures that have been adopted in the wake of the crisis. It is also an excellent opportunity to deepen the relationship of trust with these shareholders and to promote their long-term participation.
In short, saying nothing to shareholders today and postponing the general meeting (which is an opportunity to start a dialogue) is not really an option.
However, it is generally no longer possible to meet physically at the general meeting today. This is why the federal government has adopted a Royal Decree (which was published in the Belgian National Gazette on 9 April this year) in order to give Belgian companies and associations more flexibility in the organisation of their general meetings (GM) while respecting both the security measures linked to COVID-19 (social distancing) and the rights of shareholders (right to vote and the right to ask questions).
We therefore recommend that you already foresee in your invitations that it is possible that the GM may be organised differently due to current circumstances and that more precise instructions will follow. This will already give you more flexibility.
I. Legal changes
Article 4 of Royal Decree No. 4 laying down various provisions on co-ownership and on company and association law in the context of the fight against the Covid-19 pandemic (Royal Decree No. 4) provides that:
“The provisions laid down [...] shall apply during the period from 1 March 2020 to 30 June 2020 (included). The King may, by decree deliberated in the Council of Ministers, adjust the final date of this period.”
All entities falling under the application of the Code of Companies and Associations will have the possibility to organise their meetings (whether ordinary, extraordinary or special) in two different ways:
1. Postpone the general meeting
This option allows you to postpone the GM to a later date (even if it has already been convened), with a maximum extension of 10 weeks after the statutory deadline.
Please note that:
- This option is not available for companies that are in the alarm bell procedure (when net assets are negative or likely to be negative) or if the general meeting is held at the request of a shareholder representing at least 10% of the shares.
- If the general meeting had already been convened, the entire convening notice procedure would have to be restarted. The postponed general meeting is therefore considered to be a new general meeting.
- As mentioned above, this option could create doubts on the part of your shareholders as to the state and (financial) health of the company.
- It is difficult to predict whether or not the government will allow large and medium-sized gatherings, or whether shareholders will dare to attend such meetings.
2. Maintain the general meeting (remote general meeting and/or remote voting)
If you prefer to maintain/organise a general meeting in the near future, there are two solutions:
A. Remote general meeting via an electronic means of communication
If you wish to maintain or organise a general meeting at a distance and allow your shareholders to vote during the meeting (and therefore not to collect votes beforehand), you may use an electronic means of communication that meets the criteria specified in art. 7:137 of the Code of Companies and Associations, even in the absence of a statutory provision providing for this possibility.
Be aware that this option is very rarely used given the strict conditions attached to it and that it will be difficult to implement such a system today without sufficient testing (and that existing systems are quite expensive).
B. Remote voting in advance
This option allows the entrepreneur the most flexibility in terms of the organisation of the general meeting. Under this option, you can collect the votes before the general meeting.
You must make available, by mail or via the company's website, a precise voting form and a proxy form to any shareholder concerned, in accordance with article 7:146 of the Code of Companies and Associations.
In the event of use of the power of attorney, the governing body may require that the proxy be any person it appoints. A precise voting instruction (for/against/abstention) for each item on the agenda must be clearly provided.
Each shareholder retains the right to ask questions to the governing body and to receive answers (the legal entity may, however, require that only written questions be put to it, in accordance with the provisions of the Code of Companies and Associations). These answers must be made available to all shareholders.
As mentioned above, remote voting must be organised by means of a voting form OR through a website. The latter method simplifies, secures and accelerates the process of collecting voting instructions and allows for the elimination of a large amount of paper.
Nevertheless, do not lose sight of the legal and/or statutory rules that remain applicable (for example: the deadlines for convening the meeting, the provision of key documents, a convening notice that contains all the mandatory elements, correct minutes).
II. Collect your votes quickly and easily with Spreds
Due to the impossibility of holding any physical meetings during this health crisis, unless there is a guarantee that the measures in place at that time to combat the spread of the COVID-19 pandemic will be respected, companies are now forced to find other solutions to meet their decision-making needs.
For almost a year now, Spreds has been offering a programme enabling Noteholders of the various compartments of its financial vehicle, Spreds Finance, to vote remotely and in advance for any general meeting.
In order to support entrepreneurship, which is already challenging under normal circumstances, we have decided to make our tool available all legal entities.
We are in the process of reworking the tool to ensure its compliance with Royal Decree No. 4. Once ready, the tool will allow any legal entity to:
- convene easily and quickly its shareholders;
- collect their vote for one or more decisions on the agenda;
- allow proxy voting;
- visualise clearly and in real time the evolution of the votes;
- to draw up minutes;
- etc. (we are constantly developing new functions that can facilitate governance)
This tool, initially created for members of our Funded Family and their Noteholders, can be securely extended to your entire shareholding.
If you are interested in this solution or if you would like more information, please visit spreds.pro.