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, which can reasonably be expected in the circumstances, they will have an impact on Belgian companies required to hold an annual general meeting (“AGM”) 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. We have also provided an overview of certain essential provisions of a new Royal Decree that governs various aspects about holding AGMs and meetings of the board of directors in the current context, which was published on 9 April 2020.
1. SUMMARY OF NORMALLY APPLICABLE RULES RELATING TO THE HOLDING OF AGMS
(a) (i) 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.
(ii) 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.
(iii) 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 shareholders, bondholders, directors and the auditor of the company. When all the company's securities of the SA are in registered form, the notice can be sent by email in lieu of the two publications.
(iv) 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.
(b) (i) 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.
(ii) Remember that the annual accounts, the management report and the auditor’s report must be filed with the National Bank of Belgium within one month after the approval of the annual accounts and no later than seven months after the closing of the financial year. As discussed below, a new government Royal Decree provides flexibility in the deadlines for filing annual accounts with the National Bank of Belgium.
2. ALTERNATIVE SOLUTIONS TO THE HOLDING OF PHYSICAL AGMS
2.1 Written decision-making
(a) 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.
(b) Under such a procedure, it is best to ensure that shareholders are advised in advance of the process and that unanimity can be reached.
(c) Moreover, the company’s directors, statutory auditor and bondholders (or other securities holders) can ask to review the content of such written decisions.
2.2 Remote participation to the AGM
(a) 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.
(b) However, several conditions must be met in normal circumstances, 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.
(c) 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. The new Royal Decree (discussed below) relaxes this obligation by providing that the board of directors may, even when not authorized by the articles of association, require AGM participants to exercise their rights exclusively by voting remotely, by correspondence or via a website.
2.3 Use of proxies
(a) 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. The Code does not regulate the form of such proxy, which could be granted by email.
(b) 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. ROYAL DECREE
A Royal Decree has been published in the Belgian Official Gazette on 9 April 2020, in view of the social distancing rules that apply in light of the Covid-19 pandemic. Below is a brief review of the rules contained in this Royal Decree regarding the holding of AGMs and the meetings of the board of directors. The Royal Decree applies to any general meeting, whether ordinary, extraordinary or special. This is because many companies were expected to adjust their articles of associations to the New Code on Companies and Associations, which entered into force on 1 January 2020. Although Belgian companies have until 1 January 2024 to adjust their articles to the New Code, most have chosen to do so now. Note, however, that in such a case, the physical presence of a notary public is required.
3.1 Entry into force and scope of application of the Royal Decree
(a) The provisions laid down in the Royal Decree apply during the period from 1 March 2020 to 3 May 2020 inclusive. Nevertheless, note that the final date of this period may be adapted in view of the evolution of Covid-19. Please note that an AGM (or a meeting of the board of directors) convened before 3 May, may be held in accordance with the provisions of the Royal Decree even if it takes place after that date.
(b) The Royal Decree has retrospective effect from 1 March 2020 and therefore applies to any AGM held, or any notice convening an AGM, as of that date.
(c) Also, the Royal Decree applies to (i) any company, association or legal person governed by the Code and (ii) legal persons constituted by or pursuant to a specific law or regulation (provided they have a board of directors or a general meeting of shareholders).
(d) The Royal Decree establishes an optional regime. Consequently, companies that choose not to make use of the options offered (such as remote voting) must fully comply with the rules that would otherwise be applicable to them in this respect under the Code.
3.2 The holding of AGMs under the Royal Decree
(a) The board of directors of any company, association or other legal person may, even when not authorized by the articles of association, require AGM participants to exercise their rights exclusively:
- by voting remotely before the AGM by correspondence; and
- by appointing a proxy before the AGM. In this respect, the board of directors may require that the proxy be any person it appoints (in compliance with any conflict of interest rules provided for in the Code).The proxyholder is only authorized to exercise the voting right on behalf of the shareholder if it has specific voting instructions for each item on the agenda.
(b) With regard to remote voting, the board of directors of public limited liability companies (such as an “SA”) shall make a form available, or publish it on a website, in accordance with the different conditions related to remote participation (as described above under 2.2). Other companies (such as "SRL" for example) are required to comply with their articles of association or, in the absence of a statutory provision, in accordance with the conditions for remote participation referred to above (e.g.: the communication tool must be able to verify the participant’s identity and allow for direct and uninterrupted debate).
(c) For listed companies, voting forms and proxies may be sent to the company by any method (including by email, with a scan of the voting form or the signed and completed proxy) but must be provided to the company no later than the fourth day preceding the date of the AGM. Unlisted companies may require such documents to be provided no later than the fourth day before the date of the AGM
(d) A company may, in the event that it cannot guarantee that the measures to fight the spread of the Covid-19 outbreak will be complied with, prohibit any physical presence of shareholders or other persons entitled to participate in the AGM, or their proxies, at the place where the AGM is held. Nevertheless, under the Royal Decree, when a company implements remote participation in the AGM and the use of proxies, the members of the board of directors, the statutory auditor and any person to whom a proxy has been given may validly participate in the meeting remotely (including by telephone or video conference) and in this way fulfil their obligations relating to the AGM.
(e) Even without an authorization in the articles of association, any company may make available to the participants in its AGM an electronic means of communication that allows shareholders to be directly, continuously and simultaneously informed of AGM discussions (e.g. Microsoft, Teams or Skype).
(f) In addition, a company may require that only written questions are submitted, at the latest on the fourth day before the date of the AGM. In turn, the company must answer these questions in writing before or on the day of the AGM (but before the vote), or orally at the AGM if the company holds a live or recorded webcast of the meeting by conference call or video conference. For listed companies that answer the questions in writing, the answers must be published on the company's website. For unlisted companies, the Royal Decree provides that the written answers must be published in such a way that the shareholders are made aware of them (for example, on its website, by email or, where no email address has been provided, by ordinary mail).
(g) The Royal Decree also governs general meetings whose decisions must be established by authentic deed. In this respect, it will be sufficient to physically appear before the notary for the signing of the deed (i) by a single duly authorized member of the board of directors (or any other person designated by him in a proxy) in the case of an AGM held remotely; and (ii) where proxies have been given prior to the AGM, by the proxyholder designated by the proxies.
(h) The Royal Decree also provides that companies may amend the notice of the AGM already published or sent out after 1 March 2020, without repeating the formalities for convening and participating in the AGM. For listed companies, any amendment should be announced via a press release and the company's website, at the latest on the sixth day before the date of the AGM. Unlisted companies must ensure that shareholders are informed of such changes by the most appropriate means available (for example, on its website and by email).
(i) Further, the Royal Decree exempts listed companies from any obligation to use ordinary mail for advising shareholders of the notice of the AGM and sending other documents. In the same way, as indicated above, unlisted companies are required to communicate documents (such as voting forms or proxies for example) by email.
3.3 Postponing the AGM
(a) Remember that, according to the Code, the annual accounts of each company must be filed with the National Bank of Belgium within one month of their approval and no later than six months after the end of the financial year. The Royal Decree provides companies with some relief in this matter by extending the six-month period to 10 weeks because of the current Coronavirus situation, even if the AGM has already been convened.
By virtue of the foregoing, the Royal Decree thus provides for the possibility for companies to postpone their AGM to a later date, even if the AGM has already been convened.
(b) For listed companies, this postponement should be announced by means of a press release and on the company's website, at the latest on the fourth day preceding the date of the AGM already convened.
(c) Unlisted companies are to ensure that this deferral is brought to the attention of shareholders by the most "appropriate" means in the circumstances (e.g. on their website or by e-mail or, for persons for whom the entity does not have an e-mail address, by ordinary mail). Please note that for the application of the rules relating to notices, proxies and voting by correspondence, the postponed meeting is considered as a new meeting.
3.4 Holding of meetings of the board of directors
The Royal Decree stipulates that any decision of a board of directors may, regardless of the content of the articles of association, be expressed in writing by unanimous consent of all the members.
In addition, any meeting of the board of directors may, regardless of the content of the articles, be held by means of communication that permit collective deliberation (e.g. conference calls or video conferences).
In the event that the decisions of the board of directors are to be established by an authentic deed, it is only necessary for one duly authorized member of the board of directors (or any other person designated by the board of directors by virtue of a proxy) to appear physically before the notary.
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