Act amending a.o. the Companies and Associations Code (hereafter: the “CAC”) in the framework of the fight against the spread of the COVID-19 virus
The outbreak of the COVID-19 pandemic in early 2020 and the corresponding government measures to contain the virus have raised many questions about the decision-making process in Belgian enterprises, including in the longer term. After all, because of the pandemic physical meetings can no longer be the standard.
During the first wave of the pandemic, the Royal Decree of April 9, 2020 (hereafter: the “Royal Decree”) was issued to provide more flexibility regarding the organisation of general meetings of shareholders or members (and board meetings). Therein, the legislator granted two exceptional possibilities for Belgian enterprises: (1) a limited postponement of the ordinary general meeting to a later date (with a maximum of 10 weeks) and (2) the organisation of a remote general meeting (without physical presence). These measures were however limited in time and could only be applied to meetings to be held or that should have been held or to be convened or that should have been convened between March 1, 2020 and June 30, 2020. As a result, Belgian enterprises are still experiencing major practical difficulties in organizing their general meetings. There was an urgent need for a new legislative intervention to safeguard the continuity of the decision-making process of companies and associations at all times.
In order to address this matter, a new act has been adopted containing various temporary and structural provisions on justice in the framework of the fight against the spread of the COVID-19 coronavirus (Belgian Official Journal December 24, 2020) (hereafter: the “Act”). The Act has as its primary objective to take urgent measures with regards to the decision-making of companies and associations in the framework of the fight against the COVID-19 pandemic, but it also proposes a number of definitive measures in the context of the digitisation of the decision-making process of companies and associations.
With respect to companies and associations, the Act in particular provides for (i) the organisation of virtual general meetings, (ii) the right for the shareholders or members to cast upfront votes by electronic means and (iii) the decision-making process through written resolutions of the shareholders or members.
The organisation of virtual general meetings
So far, the CAC only expressly granted the possibility to the shareholders of a BV/SRL, NV/SA and CV/SC to participate in the general meeting remotely/virtually, subject to statutory authorisation. The consequence thereof was that in the event of inactivity on the part of the shareholders to provide for a specific regulation under the articles of association, the organisation of an electronic or digital general meeting was not possible. The Act now introduces the possibility to organize general meetings remotely/virtually, even without any explicit authorisation in the articles of association, in the abovementioned company forms, as well as in non-profit associations (VZW/ASBL and IVZW/AISBL).
The conditions to apply this possibility are the following:
- Decision of the managing body: The managing body must officially take the decision to organise the general meeting “at distance” and must offer to the shareholders or members the possibility to participate to the general meeting remotely through an electronic means of communication made available by the company or association;
- Information and control safeguards: The legislator also imposes a number of strict conditions in view of, amongst others, verifying the capacity and identity of the shareholders or members and guaranteeing their active participation to the meeting and the exercise of the voting rights. The procedures relating to remote participation must be clearly defined in the convening notice and the minutes must give a clear account of the proceedings of the meeting. The electronic means of communication must furthermore enable the shareholders or members to participate in the deliberations and to ask questions, unless the managing body justifies in the convening notice why the company or association cannot dispose of such electronic means of communication. This last exception is however limited in time and will only apply until June 30, 2021;
- Physical presence of the bureau: The members of the bureau of the general meeting cannot participate in the general meeting through electronic means. In this respect, it is argued that the members of the bureau are the persons who sign the minutes of the general meeting and who bear responsibility on behalf of the company or association for the valid composition of the meeting.
Upfront voting mechanism
The Act also introduces the possibility to set-up a statutory upfront voting mechanism for the shareholders or members, whereby the shareholders or members can cast their vote electronically before the general meeting takes place. An important limitation to such mechanism is however that it can only be applied if it is provided for and regulated in detail in the articles of association and if the necessary safeguards are in place to verify, amongst others, the capacity and identity of the shareholders or members.
Finally, the Act introduces the possibility for non-profit associations (VZW/ASBL and IVZW/AISBL) to take decisions of the general meeting through unanimous written resolutions of the members, even without any authorisation thereto in the articles of association. The CAC already explicitly foresaw this procedure for the NV/SA, BV/SRL and CV/SC. It is important to note that this procedure cannot be used, in any company or association, for modifications to the articles of association.
This is a positive development for VZW’s/ASBL’s, but represents a major restriction on the contractual freedom of IVZW’s/AISBL’s. For large associations with many members (and companies with many shareholders) the requirement that the written resolutions are to be taken unanimously (by unanimity of all members) is actually restricting and will be very challenging, if not impossible to organize in practice.
For a specific discussion of the impact of this new legislation on the non-profit sector, we refer to the following newsletter: Virtual & written general assemblies in (International) Non-Profit Associations.
Entry into force
The Act was adopted on December 20, 2020 and published in the Belgian Official Journal on December 24, 2020. As a result, the above-mentioned modifications to the CAC entered into force on December 24, 2020.