How can shareholder resolutions be passed despite the coronavirus restrictions?
Facilitation now applies to the wording of simple shareholder resolutions – for example, the resolution on the approval of the annual financial statements currently pending at many companies. However, this only applies to such resolutions for which a simple resolution is sufficient; the notarization requirement applicable to individual resolutions is not affected.
Since 27 March 2020, the previous requirement that for a resolution to be passed in text form either all shareholders must agree to the resolution or agree to a written vote has been abolished. This also applies without a corresponding opening clause in the articles of association. Instead, resolutions can now be passed by circulation or by email without the consent of all shareholders and without a corresponding provision in the articles of association, as long as a simple majority or any other majority provided for by the articles of association approve the resolution.
In contrast to the previous regulation, it is now possible to cast a vote in writing, even though not all shareholders agree to a written vote, and to pass a resolution in text form without unanimity. In addition to the adoption of the annual financial statements, which is currently likely to occupy many companies, this also applies to the related appropriation of profits and discharge of the managing directors, but also to changes in management, approval of certain management measures and the like.
Further requirements, such as a period of notice for invitation provided for in the articles of association, quorum or provision for a majority of votes cast, remain in place. For example, also in written proceedings the shareholders must be granted a period of time for responding and voting in correspondence with the invitation period. In addition, the majority requirements of the law and the Articles of Association also apply in written proceedings.
Does the facilitation apply to all resolutions?
This is not the case, as the facilitation does not apply to those shareholder resolutions that require notarization. For these resolutions (which require notarization), either a meeting in person must be held in front of a notary or all votes must be separately notarized. In this respect, it should be noted, in particular, that the facilitation of participation in the meeting through virtual attendance – as is provided for stock corporations, partnerships limited by shares or European Companies (SE) – does not apply to the GmbH. A virtual attendance at a meeting in person for the adoption of a resolution of the shareholders which is subject to notarization is, thus, unfortunately not possible.
What possibilities exist for minimising the number of persons present when a resolution is notarized?
In order to limit the number of persons present at a mandatory presence meeting, it is advisable to grant other shareholders, persons subject to professional secrecy or other third parties, for example employees of the notary, a power of attorney (including an exemption from the restrictions on self-dealing pursuant to Sec. 181 BGB) to participate in the shareholders' meeting which must be recorded by a notary. The limits of the articles of association with regard to the persons to be authorized must be observed. In addition, certain formal requirements may apply to the power of attorney or, in case of the involvement of foreign shareholders, additional verifications on existence and representation may be required. Ideally, however, it is possible to reduce the number of persons participating in the notarization to two: the notary and the representative authorised by all shareholders.
The requirement for notarization relates in particular to the amendment of the GmbH's articles of association. Depending on the subject matter of the resolution that must be notarized, further formal requirements may arise, such as the notarization of the subsequent subscription declaration in the case of a capital increase. This must be examined in each individual case.
How long do these regulations apply? What else must be taken into account?
The regulation on the simplification of resolutions is valid until 31 December 2021 and, in principle, it is not necessary to amend the articles of association of the company for this purpose. However, it may be advisable for the future to provide for a corresponding opening clause in the articles of association in order to significantly simplify the adoption of resolutions also beyond the duration of the legal facilitation.
We are happy to advise you in any case with regard to your upcoming shareholders meetings and shareholders resolutions and the facilitation as described above.