During these trying times where it is encouraged to work from home and avoid in-person meetings, we want to provide Belgian companies with an overview of the alternatives that are available for physical board meetings and shareholders’ meetings. If the COVID-19 crisis continues to spread during the next weeks and months, this could be particularly relevant for companies that are preparing for their annual shareholders’ meeting.
We will also discuss the recent special powers Royal Decree no. 4 issued by the Belgian federal government on 9 April 2020 (as amended by the Royal Decree of 28 April 2020), which introduces certain temporary solutions that go beyond the possibilities provided for in the Belgian Code on Companies and Associations (BCCA).
This note therefore covers the possibilities under the BCCA and the Royal Decree no. 4 for avoiding or reducing physical presence at meetings of the shareholders or the management body. Note, however, that the exceptional measures described below based on Royal Decree no. 4 will only apply (unless extended) to shareholders’ meetings that:
- have been or will be convened between 1 March 2020 and 30 June 2020,
- should be held between 9 April 2020 and 30 June 2020, or
- should have been held between 1 March 2020 and 9 April 2020 but were not held (e.g. due to uncertainty to hold the meeting safely).
Use of unanimous written resolutions
One possibility for avoiding a physical meeting is to use written resolutions. In turbulent times, it can be expected that more decisions by the board of directors are required than usual. Moreover, it is advisable to properly document such decisions in order to demonstrate that adequate efforts and actions are undertaken by the directors. Under the BCCA, it is now easier for companies to adopt unanimous written board resolutions instead of organising board meetings. Neither the urgent character nor the interest of the company needs to be justified any longer. It is also no longer required that the articles of association expressly allow for the possibility of unanimous written board resolutions. Moreover, the board can now also adopt the annual accounts by written resolution.
Royal Decree no. 4 confirms this possibility and provides that the board of directors may in all circumstances adopt unanimous written resolutions. This means that NVs/SAs which have not yet adapted their articles of association to the new BCCA can now make use of the unanimous written resolutions without the need for complying with any restrictions that would still be set out in their articles of association (e.g. a condition of urgency, as required under the old Companies Code). Please note that these restrictions will in principle become applicable again as a voluntary limitation to the current and more flexible regime in the BCCA after 30 June 2020.
Shareholders’ resolutions can also be adopted via unanimous written resolutions. It is not required that the articles of association expressly permit this. Written shareholders’ resolutions will be particularly relevant for private companies that need to have their annual accounts approved over the next few months. For listed companies, unanimous written shareholders’ resolutions are not an option. The same applies for shareholders’ meetings that need to be recorded in an authentic deed or for which the articles of association would expressly exclude this possibility. In these instances, a solution can be sought in technology, remote voting or proxies, as further described below.
Meetings via electronic means
Under the BCCA, if allowed under the articles of association, participants can attend and the shareholders can vote at the shareholders’ meeting via electronic means made available by the company (for example, via videoconferencing or a web portal). The company must be able to verify the identity of the participants using the electronic means. Verification can be done via an eID, as is increasingly being used in software applications. The procedure and conditions for the use of the electronic means will need to be set out in the articles of association. The procedure must also be mentioned in the convening notice, which in principle can be sent out electronically.
In practice, however, we see that certain listed companies allow shareholders to participate in the shareholders’ meeting via electronic means, but they typically do not allow real time e-voting during the meeting. Systems enabling a large number of persons to participate actively remotely, while at the same time ensuring that only those entitled to participate actually do so, are rarely used in Belgium and difficult to implement in practice. Instead, shareholders are typically invited to vote remotely prior to the meeting or to give a proxy (see below).
Royal Decree no. 4 allows the holding of the shareholders’ meeting via electronic means even if it is not expressly provided for in articles of association. The Royal Decree furthermore allows members of the bureau, the board of directors or, if applicable, the statutory auditor to participate to the shareholders’ meeting via electronic means, whereas they normally would have to attend in person. In the case of an extraordinary shareholders’ meeting requiring the assistance of a notary public, the physical attendance of the notary and one director/member of the bureau and/or the (single) proxyholder is required to sign the notarial deed.
Contrary to shareholders’ meetings, the organisation and voting of board meetings via electronic means is much more widely used. The fact that the board of directors is a collegiate body does not mean that members must be physically present. It is accepted that a board meeting is organised by tele/video conference, provided that a direct and uninterrupted debate and decision-making process in real time is always possible. The possibility of holding board meetings via electronic means does not need to be expressly permitted under the company’s articles of association.
Royal Decree no.4 confirms this. The Royal Decree also provides that if a board resolution needs to be adopted the presence of a notary (for instance, in the case of authorised capital) at least one member of the board of directors or a special attorney-in-fact can meet the notary in person; the other members can participate by means of electronic communication.
The BCCA allows shareholders to cast votes remotely prior to the shareholders’ meeting, by letter or via the company’s website, via a form made available by the company. This can also be an effective way to reduce physical attendance at meetings. It is used by certain Belgian listed companies. Under the BCCA, this possibility must be expressly provided for in the company’s articles of association.
Under Royal Decree no. 4 the board of directors now has been given the power to impose on shareholders that they exercise their voting rights remotely, in combination with proxy voting (see below). This can be done even if the company’s articles do not expressly permit remote voting.
If necessary, the Royal Decree no. 4 allows companies to send the voting forms to the shareholders only by electronic means. Remote voting forms can be signed by e-signature as an alternative for wet ink signatures. This can be a standard e-signature (such as a pdf scan of a signature or even a name under an email) and does not necessarily need to be an advanced or qualified e-signature within the meaning of the European eIDAS Regulation.
Use of proxies
Another way of registering a vote without attending the meeting itself is to appoint a proxyholder. This possibility does not need to be provided for in the articles of association. Even if the articles do not expressly allow for remote voting, companies could urge shareholders to vote by proxy ahead of the meeting.
The shareholders can give a proxy to another shareholder or a third party to attend the meeting in person and vote on his/her behalf. The BCCA allows that proxies for shareholders’ meetings of listed companies be signed by e-signature (again a standard e-signature is in principle sufficient). The proxy form can in principle be sent electronically unless otherwise decided. For listed companies, the convening notice must mention the modalities to give proxy and the conditions under which the company accepts proxy forms that are sent electronically.
Under Royal Decree no. 4, the board of directors can now oblige the shareholders to exercise their voting rights through a (single) proxyholder designated by the board (in combination with remote voting as described above). The existing requirements under the BCCA for such proxy remain applicable. The proxy forms can be made available by electronic means only. Royal Decree no. 4 temporarily waives the obligation for listed companies to send certain documents by mail to holders of registered shares.
Directors can also validly give proxy to another director to attend the board of directors’ meeting and vote on his/her behalf, provided that it is not expressly forbidden by the articles of association. An effective deliberation should also remain possible at all times, meaning that at least two directors must participate in the meeting in person or via electronic means.
Right to ask questions
Under Royal Decree no. 4, a company that decides to organise its shareholders’ meeting only by remote voting and/or proxy voting may require shareholders to ask questions in writing only and ahead of the meeting. The company can require shareholders to submit their questions four days prior to the meeting. The board of directors answers these questions in writing at the latest on the day of the shareholders’ meeting but before the vote, or orally at the shareholders’ meeting if it chooses to organise a live or recorded broadcast of the meeting by telephone conference or videoconferencing. Listed companies must also publish the answers to the written questions on their website.
Postpone or adjourn the AGM?
It is conceivable that a company that already sent out its convening notice, may now wish to make use of the measures offered by Royal Decree no.4 and change the organisation of its shareholders’ meeting. This is possible, provided that the shareholders are properly informed. For listed companies, this amendment must be announced by means of a press release and on the company’s website, at the latest six days prior to the shareholders’ meeting. Listed companies are, however, encouraged by the FSMA not to wait until this deadline and to communicate as soon as possible. No new convening period needs to be respected. Non-listed companies must ensure, as far as possible, that this amendment is brought to the attention of shareholders and other persons entitled to participate in the meeting.
It is also possible that a company that already convened its annual shareholders’ meeting (AGM) wishes to postpone the meeting. Royal Decree no. 4 confirms this possibility for the board of directors to postpone a meeting. Shareholders need to be properly informed, in a listed company at least four days prior to the shareholders’ meeting.
For the upcoming AGMs, a postponement of the shareholders’ meeting could mean that the obligations to submit the annual accounts to the AGM for approval within six months after the end of the financial year and file the annual accounts with the National Bank of Belgium within thirty days of approval by the AGM would not be met. Royal Decree no. 4 therefore defers these deadlines with maximum 10 weeks. For listed companies the deadlines for publishing annual and half year reports are also postponed by 10 weeks.
Finally, we draw your attention to the fact that the shareholders’ meetings that have been convened following a situation of (expected) negative net assets, or at the initiative of the auditor or shareholders in accordance with the requirements of the BCCA cannot be postponed.