The deadline for holding the annual General Assembly for the companies is getting close, but the coronavirus outbreak threatens to disrupt the normal course of their holding?
Directors and general managers are trying to assess the feasibility of holding the general assembly when it is necessary to maintain a physical distance and when the transportations are highly decreased, if not completely suspended.
However, not holding the general assembly also leads to potential risks and liabilities, not being able to approve the financial statements, appoint new directors, and allocating the dividends, etc. This situation can hinder the strategic development of the company.
What are the available alternatives for the companies to attend the general assembly during this period of lockdown?
The obligation to hold the general assembly and the legal risks of its cancellation
The law requires that general assembly intended to approve the annual accounts of companies must be held within six months after the end of the fiscal year, according to article 676 of the commercial code.
In view of the current circumstances, the president and managing directors are confused to whether cancel or postpone the meeting due to “force majeure” events.
However, this reason cannot justify alone the cancellation of the general assembly, especially if we are in presence of shareholder’s agreement explicitly instructing that the general assembly must be hold within a fixed term.
Especially with the silence of the law which does not qualify the pandemic until now as a case of force majeure.
In addition, the article 815 of the commercial code provides with criminal liabilities in case the General Assembly is not hold within the provided deadline.
Despite the current situation, the company must find a solution to hold the General Assembly and avoid criminal and administrative sanctions.
The available legal options to facilitate the holding of the general assembly
Actually, many companies seem to opt for virtual meetings, without the physical presence of the shareholders by videoconference.
However, in order to enjoy this option, it must be explicitly mentioned in the Statutes and in any case, it should follow strict rules and requirements.
The convocation of the Assembly by the management body within the prescribed deadlines must be respected and served by registered letter, as well as by email with acknowledgment of receipt.
An electronic attendance sheet has to be established and signed electronically. In addition, the minutes of meeting of the Assembly should follow the same rules.
Furthermore, it is possible to appoint a proxy to represent a shareholder in the Assembly (and here, please note that only shareholders can be represented and not directors).
Shareholders are empowered to give proxy to another shareholder to attend the general meeting and approve decisions on their behalf, in accordance with article 581 of the Commercial Code.
Finally, if the statute allows it, the General Assembly and the decisions concerning the items present in the Agenda can be taken by written consultation, according to article 556 and 580 of the commercial code.
Meanwhile, the GA decisions must be taken by respecting the conditions of attendance sheet, minutes of meeting and the voting rights of the attendants.
Otherwise, it can expose the directors to penalties provided in the article of the commercial code.
How the directors should proceed?
Concretely, in the silence of the legislator and since no delay for the summoning of the Assembly has been resolved so far, the administrators are obliged to organize it within the deadlines specified by law. Another option, provided by art. 676 of the Commercial Code, is to postpone the hold of the Assembly, through a formal procedure.
The Directors should submit a request to the competent territorial Court, asking for such an extension of the deadline for holding the Assembly, duly justifying the reasons.
Notwithstanding the outcome of the request, directors should act proactively and try to hold it in the original deadline or the one allowed by the Court to set aside the potential risks and liabilities, as well as penalties, while complying with the safety and health measures.