While the coronavirus pandemic situation continues to have an impact on the sound governance of companies and other legal entities, the bill of law 7673 (the Bill) suggested the extension of the measures enabling the companies and legal entities listed therein to hold their general meetings and other necessary meetings without physical presence.
These measures were initially provided for by the Grand-Ducal Regulation of 20 March 2020 (the Regulation) introducing measures concerning the holding of meetings in companies and other legal persons and was continued by the law of 20 June 2020 (the Law of June) extending those measures (the Regulation and the Law of June collectively referred as the Corporate Covid Laws) .
Considering that the effects of the law of June would have fade away by 30 September 2020, it was of paramount importance to further extend the captioned measures. Thus, the bill of law 7673 has been adopted on 22 September 2020.
Rules regarding the convening and holding of meetings for corporate organs as well as shareholders’ meetings are provided in the law dated 10 August 1915 regarding commercial companies, as amended as well as the law of 24 May 2011 on the exercise of certain rights of shareholders at meetings general information of listed companies (the Laws).
For various reasons, including amongst other substance or sound corporate governance, holding of physical meetings was the rule and only in restricted cases, provided in the Laws and with a necessary specific dispositions in the articles of association of companies, option was granted to hold video conference meetings or similar.
The current health situation and the corresponding measures that have been decided by the Government justify maintaining the above-mentioned possibility for companies and other legal entities to hold their meetings without physical presence. However, such right must be provided for by law, since a company that would hold a general meeting by videoconference or written resolutions when the articles of association do not provide for such option risks exposing its directors or managers to liability for breach of the articles of association or the law. It is therefore essential to provide legal certainty for such situations by means of a law.
THE LAW OF 23 SEPTEMBER 2020
Further to the adoption of the bill, the Law of 23 September 2020 extends the measures taken by the Corporate Covid Laws.
This means that a company may, even in the absence of any provisions in such a sense in the articles of association, irrespective of the number of participants in its general meeting, hold any general meeting without a physical meeting and may require its shareholders or members and other participants in the meeting to attend such meeting and exercise their rights: (1) by remote voting in writing or in electronic form that allows their identification provided that the full text of the resolutions or decisions to be taken will have been published or will have been duly transmitted to them; or (2) by videoconference or other means of telecommunication enabling their identification.
A shareholder may decide to participate in the general meeting and exercise his rights through a proxy appointed by the company. However, in the event that a shareholder would appoint a proxy other than the one designated by the company, this proxy may only be authorised to participate in the meeting in the forms provided for in items (1) and (2) above.
For the sake of security, the Law of 23 September 2020 expressly provides that shareholders participating by such means shall be deemed to be present for the calculation of the quorum and the majority at this general meeting.
These rules equally apply to general meeting of bondholders.
With the same logic, notwithstanding any provision to the contrary in the articles of association and without the articles of association being required to provide for the possibility thereof, board of directors and other organs of any company may hold their meetings without a physical meeting: (i) by written circular resolutions; or (ii) by videoconference or other means of telecommunication enabling the identification of the members of the corporate body participating in the meeting.
Again, members of such bodies participating by such means shall be deemed to be present for the purpose of calculating the quorum and the majority.
The law of 20 June 2020 extending the measures concerning the holding of meetings in companies and other legal entities is repealed.
ENTRY INTO FORCE
The law of 23 September 2020 shall enter into force on 1st October 2020 and shall remain in force until 31st December 2020 inclusive.
Should you need any further information, please contact Pierre-Alexandre Degehet by sending an email to padegehet [at] bsp.lu.