Belgian authorities, like some of their European counterparts, have taken extreme measures to fight the spread of Covid-19, including restrictions on social gatherings. If these strong measures continue for the next few weeks, they will have an impact on Belgian companies required to hold an annual general meeting (“AGMs”) in April and May.
In light of this unprecedented situation, we have set out below some practical alternatives that will limit physical contact when holding an AGM.
1. Summary of certain applicable rules relating to holding AGMs
Each year, an AGM must be held within six months of the closing of the financial year at the place and time and on the date indicated in the company’s articles of association. This is when the shareholders vote to approve the annual accounts, allocate the results and grant a discharge to the directors and the auditor. Most AGMs take place in the period from April to June.
For an unlisted company such as an SRL, where all the company’s securities are in registered form, the notice can be sent by email (no publication is required) or, alternatively, by post for individuals or entities without an email address.
For an unlisted company such as an SA, the shareholders must receive a notice at least 15 days before the AGM via: (i) an announcement in the Belgian State Gazette; (ii) an announcement in a national newspaper, unless the AGM’s agenda is limited to examining the annual accounts, management report and auditor’s report, and discharging the directors and auditor; and (iii) notification on the company’s website.
The notice should also be sent by email to the company’s shareholders, bondholders, directors and auditor. If all the SA’s securities are in registered form, the notice can be sent by email instead of the two publications.
For a listed company, shareholders must receive a notice at least 30 days before the AGM via: (i) an announcement in the Belgian State Gazette; (ii) an announcement in a national newspaper; (iii) a declaration in any media outlet available across the European Economic Area; and (iv) notification on the company’s website. In addition, the notice should be sent by email to the company’s shareholders, bondholders, directors and auditor.
The Belgian Code on Companies and Associations (“Code”) provides that an attendance list must be produced.
During the Coronavirus period, we would advise sending the notices and proxies of the AGM by email for unlisted companies. We would also recommend supplementing the share register with the email addresses of the respective shareholders, if necessary.
Remember that the annual accounts, the management report and the auditor’s report must be filed with the Belgian National Bank within one month after the approval of the annual accounts and no later than seven months after the closing of the financial year.
2. Alternative solutions to holding physical AGMs
1. Written decision-making
Resolutions in writing can be adopted to limit physical contact when holding an AGM. The Code allows for shareholders to take decisions in writing, provided that such decisions are unanimously adopted and are not required to be notarized in an authentic notarial deed. In the latter case, the formalities regarding the notice of the AGM would not need to be completed.
Under such a procedure, it is best to ensure that shareholders are advised in advance of the process and that unanimity can be reached.
Moreover, the company’s directors, statutory auditor and bondholders (or other securities holders) can ask to review the content of such written decisions.
2. Remote participation in an AGM
The Code provides the option for company shareholders, bondholders and any securities holders to organize the meeting via electronic communication using well-known applications such as Microsoft Teams and Skype.
However, several conditions must be met, as summarized below:
- The company’s articles of association must permit such electronic participation.
- The communication tool must be able to verify the participant’s identity (by using e-ID, for example).
- The tool should also allow for direct and uninterrupted debate, without impairing the exercise of shareholders’ voting rights.
- Shareholders can cast their vote electronically or by correspondence prior to the AGM, provided that this is permitted under the articles of association.
- Shareholders must have been clearly informed of the proposed procedure in order to participate remotely in the AGM.
Note that the remote voting forms sent to the company are valid for any subsequent meeting that has the same agenda.
The Code does not permit the directors and statutory auditor to participate electronically in the AGM. As a practical solution, the directors and statutory auditor could issue waiver letters, including by email.
Any other methods of voting via letters or a document provided by the company, and which need to be addressed to the company, should be validated according to the articles of association.
3. Use of proxies
The use of proxies can be a useful alternative for avoiding physical contact at an AGM. Shareholders are allowed to vote by proxy given to another shareholder or a third party, provided that this is not limited or forbidden by the company’s articles of association. The Code does not regulate the form of such proxy, which could be granted by email.
In the event that an AGM is postponed, proxies remain valid, provided that the next AGM has the same agenda items and that the proxies have not been revoked by the shareholders before the reconvened AGM.
Another way to limit physical contact could be to convene an AGM and include in the notice an invitation to an informal videoconference several days before the effective date of the AGM. During the videoconference, management would present the Board report and the annual accounts, and the shareholders would be able to ask questions. At the end of the videoconference, shareholders would be invited to vote by proxy on the day of the AGM.
3. Financial Services and Markets Authority (FSMA) guidelines
The FSMA is aware that it will not always be possible to hold a physical general meeting, given the mandatory measures imposed by the government and the fact that not all companies’ articles allow remote AGMs.
It is likely that legislation in this regard may be adopted soon, allowing companies to postpone their general meetings or to hold them remotely by electronic means.
The Code provides that an AGM can be postponed for a fixed term of three weeks (for unlisted companies) or five weeks (for listed companies) through a board decision during the AGM itself. Further, an AGM can also be postponed by a shareholder decision with a simple majority (or a unanimous vote in the case of written decisions) for a period decided by the shareholders.
Nevertheless, the board of directors must be prudent and organize such AGM within six months after the closing of the financial year, as the damage suffered by third parties will be presumed to arise from this delay, thus becoming the responsibility of the board of directors.
The FSMA states: “If listed companies should opt to hold a general meeting remotely, they would have to be particularly attentive to communicating clear information about the way in which shareholders and the holders of other securities will be able to exercise their rights.”
4. Royal decrees
The Minister of Justice, Koen Geens, has recently submitted three royal decrees to the government, including a number of adjustments to the organization of AGMs.
These royal decrees appear to provide that AGMs already convened or to be convened before 19 April may be held on the planned date by electronic means or in writing. Another solution would be to postpone the AGM to a later date (up to 10 weeks after the deadline, which in most cases is 30 June).
These decrees, which are expected to be published in the next few days, further specify that the board of directors may, in all circumstances, take a unanimous decision in writing, and may deliberate and decide via an electronic means of communication.
Finally, by clarifying matters, these government decrees will provide more legal certainty in an uncertain environment.
Vincent Dirckx, Partner, Brussels
Cedric Guyot, Partner, Brussels
Evrard De Lhoneux, Junior Associate, Brussels
