Belgium introduces enhanced flexibility in the organisation of shareholders and boards’ meetings
The social distancing measures and travel restrictions imposed by the governments to limit the spread of the COVID-19 virus make the holding of meetings of the bodies of the Belgian companies highly complicated in practice. The general meeting of shareholders can only meet by electronic means if the articles of association expressly allow it; the same applies to the possibility for the shareholders to vote in writing before a meeting. Moreover, a resolution must obtain the unanimous consent of all shareholders in order to be adopted in writing. With respect to the board of directors, the right to adopt unanimous written decisions can be limited in the articles of association and those which have not yet been aligned with the new Belgian Companies and Associations Code still often limit this possibility to exceptional cases duly justified by the urgency and the corporate interest in accordance with the previous wording of the legal provision.
Updated on 12 May 2020
For most companies, the statutory date on which the board of directors will have to submit the annual accounts to the approval of the annual general meeting of shareholders is however fast approaching. In addition, the companies need to make numerous decisions to deal with the current pandemic (e.g. in their relationships with their contracting parties or employees).
On 9 April 2020, the Belgian government has adopted a Royal Decree (the Royal Decree) to address these situations. It appropriately clarifies the current uncertainty and allows the companies to ensure their functioning during the pandemic without endangering the health of the members of their corporate bodies and without risking to spread the virus.
What are the measures taken for the general meetings of shareholders?
Alternative means of participation and voting
The Royal Decree provides for alternative means to adopt decisions and hold general meetings of shareholders behind closed doors. It overrides any legal provision or provision of the articles of association to the contrary.
The directors can impose on the shareholders (and other participants in the general meeting) to use one of the following two possibilities:
- Cast their votes prior to the general meeting by correspondence by means of a form made available by the directors or published on a website; or
- Grant a power of attorney before the general meeting. The directors can require that the proxy holder be a person designated by the directors (without prejudice to the conflict of interest rules (if applicable)). The power of attorney must include specific voting instructions.
The voting form or the power of attorney must be signed (as the case may be, electronically) and sent to the company by any means, including e-mails to which a scanned or photographed copy of the document is attached. Listed companies must receive the document no later than the fourth day before the general meeting.
If the company implements the abovementioned procedures, it can prohibit the physical presence of the shareholders and other participants if it is unable to ensure compliance with the social distancing measures. The officers of the general meeting (if any), the directors, the statutory auditor and the proxy holder designated in accordance with such procedures remain entitled to physically attend the general meeting but can also participate remotely, for instance by conference call or video conference. The company can decide to extend the possibility to participate remotely to the shareholders and other participants. The Ministry of Justice has further specified that general meetings can also be held by conference call or video conference outside the scope of the Royal Decree and despite the absence of authorisation in the articles of association provided the participants are validly convened, can participate, debate and vote and can sufficiently identify themselves (which is only possible with a limited number of participants).
In case the convening notices have already been sent, the company can communicate the procedural change by the most appropriate means (including e-mails) without having to repeat the convening formalities. For listed companies, this must be made public by press release and through the website of the company at the latest on the sixth day before the general meeting. Listed companies are further exempt from the obligation to send the convening notices and other documents by ordinary mail or to make them available at their registered office.
The powers of attorney already received by the company and containing specific voting instructions shall remain valid even if the proxy holder is not the one designated by the directors. Such proxy holder will not have to be present at the general meeting.
Questions and answers
If a company opts for the abovementioned possibilities, it can further impose on the shareholders and other participants to raise their questions in writing no later than the fourth day before the general meeting. The company will then have to answer these questions either (i) in writing (at the latest on the day of the meeting but before the vote) or (ii) orally during the meeting (but only if it has organised a broadcast of the meeting that is accessible to all participants or organised remote participation via the use of electronic means. For listed companies, the written answers must be published on the website of the company. For non-listed companies, the publication can take any form provided it allows the shareholders (as well as all other persons allowed to participate in the general meeting) to get acquainted with the responses.
General meetings of shareholders in front of a notary public
With respect to the general meetings of shareholders that must be held in front of a notary public (e.g. to decide on a capital increase, the alignment of the articles of association with the new Belgian Companies and Associations Code, etc.), the Royal Decree imposes the physical presence of the notary public and (i) either a duly authorised director or another person appointed by the directors in case the shareholders have casted their votes prior to the meeting and/or (ii) the proxy holder in case the shareholders have granted power of attorney prior to the general meeting, both in accordance with the procedures described above.
Are the companies allowed to postpone the approval of their annual accounts?
In accordance with the Belgian Companies and Associations Code, the annual general meeting of shareholders must approve the annual accounts of a financial year on the date set out in its articles of association and within six months as of the closing date of the financial year concerned. The directors must then file the approved annual accounts with the National Bank of Belgium within thirty days as of their approval and within seven months as of the closing date of the financial year.
The Royal Decree extends the six-month and seven-month deadlines by ten weeks.
For the avoidance of doubt, the directors can also postpone any other general meeting of shareholders (i.e. unrelated to the approval of the annual accounts) without having to comply with the abovementioned time limits. By way of exceptions, such postponement is not allowed (i) if the net assets of the company threaten to become or became negative or (ii) when the general meeting has been convened by or upon request of the statutory auditor or the minimum percentage of shareholders required by law.
For listed companies, the postponement must be made public by way of a press release and on the website of the company no later than the fourth day before the general meeting. Non-listed companies can choose the most appropriate means of communication (e.g. e-mails or their website).
The directors will have to carefully assess the opportunity to either hold the general meeting of shareholders by one of the alternative means of participation and voting or postpone it in light of the corporate interest of the company. Depending on the factual situation, the postponement could, for instance, be preferable from a tax substance point of view. Click here for more information on this subject.
What about the meetings of the board of directors?
The Royal Decree also simplifies the holding of meetings of the board of directors by confirming that, regardless of any legal provision or provision in the articles of association to the contrary:
- The board of directors may adopt all decisions by unanimous consent of all directors, expressed in writing or by any other means of communication referred to in article 2281 of the Belgian Civil Code (for instance, e-mails, facsimiles or any means taking the form of a written document for the addressee);
- The board of directors may hold any meeting by means of any telecommunication mechanisms allowing a collective deliberation between the directors, such as a telephone or video conference.
For the meetings of the board of directors that must be held in front of a notary public (e.g. to increase the share capital (“authorised capital”)), the physical presence of one duly authorised director (or another person appointed by the directors) is required. The other directors can participate remotely.
Which meetings are concerned by the Royal Decree?
The Royal Decree has retroactive effect as of 1 March 2020 and shall remain valid until 30 June 2020 (unless extended). It applies to all shareholders’ meetings and board meetings (i) to be held or which should have been held during this period as well as all meetings (ii) convened or which should have been convened during this period, even if the meeting concerned is scheduled after 30 June 2020.
It does not apply to shareholders’ meetings or board meetings which have already been held between 1 March 2020 and 9 April 2020 (i.e. the publication date of the Royal Decree).
Wim Vande VeldePartner Attorney at Law
Wim Vande Velde is a local partner in the Corporate and M&A Practice Group in Belgium. He has extensive experience in national and international M&A transactions for both listed and non-listed companies, as well as in corporate restructuring.T: +32 2 743 43 96 E: [email protected]