The new company law and the virtual general meeting

After the revision of the Company law has partially entered into force in 2021 with a few new regulations regarding gender quota and transparency requirements for commodity companies, numerous further amendments will come into force as of 1 January 2023. This will conclude the revision of company law after a revision phase lasting several years. These changes also include the adaptation of the institute of the general meeting (AGM) to modern times. 

According to the previous law, shareholders or their representatives must meet physically at an AGM. This was the only way to guarantee the principle of immediacy. This principle states that a mutual exchange of information among the shareholders and the board of directors must be ensured. The outbreak of the Covid 19 pandemic made it impossible to hold an AGM with physical attendance due to the measures taken. So that AGMs could still be saved, Covid-19 Ordinance 3 introduced the possibility of having AGMs virtually. After the ordinance expires at the end of 2022, the possibility of holding AGMs will continue to exist. The new company law provides for new forms of AGMs.

One of these new forms is the virtual AGM. With the virtual AGM’s introduction, the AGM institute is to be adapted to technical progress and the needs of modern society. However, specific regulations must be considered for a virtual AGM to be validly held. 

Statutory basis

A virtual general meeting can only be held if there is a corresponding basis in the articles of association. For example, joint-stock companies that wish to have their general meeting virtually in the future must amend their articles of association. This amendment to the articles of association requires a majority resolution of the AGM and public certification. 

Form and access

Concerning the form, the law does not contain any significant requirements. For example, a virtual general meeting can be conducted solely utilizing audio transmission. A transmission by image/video is not required. However, the AGM must offer sufficient opportunities for interaction to guarantee an opinion-forming process. For example, an AGM that only runs via chat would not meet this requirement. Since the virtual AGM will be run via a digital tool such as Zoom or similar, it must be ensured that the shareholders or their representatives also have technical access. Thus, before convening the virtual AGM, the board of directors must ensure that shareholders with little understanding of technology also have access to the AGM.

Security

Before convening the AGM, the board of directors must ensure that other requirements are met to prevent the votes from being falsified. For example, the identity of the participants must be ascertainable, the voices of the AGM must be able to be transmitted directly, each participant must be able to submit motions and take part in the discussion, and the result of the vote must not be falsified (Art. 701e nOR).

Convening

As in the previous law, the virtual AGM must be convened by the board of directors at least 20 days before the meeting date. 

Minutes

The board of directors must also keep minutes of the virtual general meeting. In principle, the minutes must be kept in the same manner as the minutes of a standard AGM, but they must also record any relevant technical problems that occur during the virtual AGM (Art. 702 para. 2 CO).

Technical problems

Relevant technical problems must be recorded, as already mentioned. However, if a situation occurs during a virtual AGM that makes it impossible to continue the meeting, the AGM must be repeated at a new time. However, the resolutions passed until the problem is not invalidated by this but remains valid (Art. 701f nOR).

Conclusion

The virtual AGM will make holding an AGM easier and more flexible. This is of great advantage for companies with many shareholders around the world. However, some preparations are necessary to make use of the new form of the AGM. For example, a company limited by shares must change its articles of association if it wants to hold a virtual AGM. Providing essential electronic means also requires a lot of effort and time. For this reason, companies limited by shares intending to hold a virtual general meeting are recommended to make the necessary arrangements already in the current year.