Belgium - New provisions that facilitate remote participation and voting at shareholders' meetings
The stringent measures put in place since the outbreak of Covid-19 directly affect the functioning of corporate bodies. Since gatherings of people are strictly limited and social distancing rules must be respected, the organisation of physical shareholders’ meetings has created practical challenges.
On Thursday 17 December 2020, with the prospect of having to cope for several more months with severe restrictions on gatherings, the Belgian Parliament agreed on new measures that provide for some additional flexibility to adopt decisions and hold meetings. These measures are much less extensive then the measures taken in April 2020 during the first lockdown. They consist of changes to the Companies and Associations Code and are not limited to a specific period of time (with one exception, addressed below).
Summary of the new measures
To summarise, the newly adopted measures are intended to facilitate remote participation and voting at the shareholders’/members’ meetings of the NV/SA, BV/SRL, CV/SC, (I)VZW and A(I)SBL. The measures for shareholders’ meetings of the NV/SA and BV/SRL provide that:
- The management body can more easily choose to hold shareholders’ meetings 'virtually' by making electronic means of communication such as videoconferencing software available to the shareholders (as well as convertible bond holders, holders of subscription rights and holders of certificates issued in co-operation with the company, if any). Prior to the new measures being taken, this required an express authorisation in the articles of association.
- Even if the shareholders’ meeting is held virtually, the company law rule remains that the company must simultaneously hold a physical meeting (a so-called 'hybrid' meeting). In this respect, the newly adopted measures do not give the company the power to prohibit its shareholders from physically attending the meeting. This is different from the special measures in Royal Decree No. 4 of 9 April 2020, which have expired. Obviously, this raises issues given the Covid-19 stringent rules on gatherings, in particular for listed companies or non-listed companies with a large number of shareholders.
If a company makes use of this possibility to hold a hybrid meeting, minimum conditions apply:
- The company must be able to verify the capacity and identity of the shareholders on the basis of the electronic means of communication used.
- The convening notice for the shareholders’ meeting must include a clear and precise description of the procedures relating to the remote participation. Additionally, if the company has a corporate website, it must publish this information on the website. For non-listed companies, access to this information can be restricted to the persons who are entitled to participate in the meeting.
- The means of communication must function 'in two directions' (e.g., so that the shareholder can directly, simultaneously and without interruption follow the debates, exercise its voting rights and ask questions during the meeting through the webcast).
However, the company can limit itself to a system of 'one-way communication' until 30 June 2021 at the latest, on condition that it has valid reasons and it justifies this in the convening notice. During this 'one-way communication' period, the shareholders have the ability to follow the course of the meeting live, without being able to actively intervene in the debate. In that case, shareholders who wish to participate actively in the debate and wish to exercise their right to ask questions during the meeting, can only do so by taking part in the physical meeting.
- From a practical point of view, if the two-way communication by electronic means is set up, the members of the bureau of the general meeting must still be physically present at the place where the shareholders’ meeting is physically organised. In contrast, the members of the management body and the auditor can validly participate at a distance. The members of the management body, and where appropriate, the auditor, must through electronic means provide the necessary explanations and answer questions of shareholders.
The new set of measures provide for more flexibility to adopt decisions and hold shareholders’ meetings. Contrary to the previous rules, an authorisation in the articles of association will not be necessary to hold virtual meetings. The management body has the power to decide whether the meeting should be held virtually or not. In reaching this decision, the management body must consider the number of shareholders and the technological possibilities at the disposal of the company.
The new set of measures does not contain any obligation to hold virtual shareholders’ meetings (not even for listed companies, contrary to the government’s initial intention). The government has justified this approach by stating that organising a virtual meeting with many participants, where everyone can communicate electronically and vote in the same way (a two-way communication), would lead to considerable organisational, technical and financial problems, especially for large companies with a large amount of shareholders.
In this context of having no obligation to organise a virtual shareholders’ meeting, the specific temporary measure of allowing a company to limit itself to a (justified) system of 'one-way communication' until 30 June 2021 is somewhat unnecessary and might give rise to questions of interpretation.
More importantly, it is remarkable that under Belgian company law a simultaneous physical meeting is still required when a company opts to hold a virtual shareholders’ meeting. It is expected that if there are still Covid-related restrictions on annual meeting gatherings next spring, there will be a conflict between company law rules and the rules restricting gatherings. In addition, some companies already have to hold shareholders’ meetings now. There are indirect ways to address this issue, but it will require careful consideration. It would be much clearer if the government and the legislator put measures in place that exclude the right of shareholders and their proxies to participate in person at meetings when special Covid-19 regulations prevent this, as was the case under Royal Decree No. 4 of 9 April 2020.
Besides, the Belgian approach is contrary to our neighbouring countries. In those countries, companies are expressly allowed to prohibit attendance in person at shareholders’ meetings and alternative means of participation, tailored to the Covid-19 context, have been provided for.
A final point to note in this context is to ensure compliance with the EU’s General Data Protection Regulation 2016/679 (GDPR). In addition to complying with their regular GDPR obligations, companies organising virtual shareholders’ meetings should verify whether all individuals involved (including shareholders) have been properly informed about the processing of their personal data in this context. If not, an additional information notice will have to be provided. This could for instance be required if additional data is gathered (such as the email addresses of participants to invite them to the webcast or live stream) or if their data is used for new purposes (such as broadcasting or recording the shareholders’ meeting and making it available on a secured platform). Companies will also need to assess whether they have a valid legal ground for the intended use of the data and, where applicable, document such assessment and/or obtain consent. Lastly, it should be remembered that an external service provider assisting with the organisation of the virtual shareholders’ meeting may also qualify as a processor, triggering the need to have a data processing agreement in place with such external service provider.