Amendments to the existing regulations concerning the manner of holding shareholders’ meetings in limited liability companies were introduced by Polish Anti-Covid Shield 2.0, i.e. the Act of March 31, 2020 amending the Act on special solutions related to the prevention and combating of COVID-19, other infectious diseases and crisis situations caused by them, and some other acts (Journal of Laws of 2020, item 568). More importantly, the changes introduced are permanent, not related to a duration of any special measures relating to public health.
NO NEED TO AMEND THE ARTICLES OF ASSOCIATION
The fundamental change concerns participation in the shareholders’ meeting by means of electronic communication. Such a solution was possible already on the basis of the amendment to the Polish Commercial Companies Code of September 3, 2019, however, the condition for holding an online meeting was that such a possibility was stipulated in the articles of association. Pursuant to the latest regulations, it is no longer necessary to establish an e-meeting in the articles of association – on the contrary, if the shareholders do not want to hold the shareholders meetings in this way at all, they must explicitly exclude this option in the articles.
Pursuant to the amended Article 234(1) §1 of the Commercial Companies Code, participation in the shareholders’ meeting may also be through an online meeting, unless the articles of association state otherwise. Similar terms are introduced by the provisions of Article 208 §5(1) of the Commercial Companies Code and Article 222 §1(1) of the Commercial Companies Code, regarding online meetings of the management board or supervisory board.
RULES OF CONDUCT
Under the amended provisions of Art. 234(1) §1 of the Polish Commercial Companies Code, the corporate body (usually management board) convening the meeting decides that the shareholders’ meeting will be held online. It is worth noting, however, that the management board cannot independently define the detailed rules and procedures of remote participation in the meeting. These issues should be specified in the rules of conduct of the online meeting, adopted by the supervisory board. In the absence of a supervisory board – these rules of conduct may also be approved by a resolution of shareholders. The rules may not specify requirements and limitations that are not necessary to identify partners and ensure the security of electronic communication. The rules may also be adopted by a resolution of the shareholders without holding a meeting, if the shareholders representing an absolute majority of votes agree in writing to the content of these regulations.
On the basis of the above, the adoption of such rules should be the first step on the way to convening and conducting an online meeting.
AT THE HEADQUARTERS OF THE COMPANY
It should be emphasized, however, that under the amended provisions of the law, the meeting itself is NOT transferred to the Internet – one can only participate in it by means of electronic communication. The meeting must still be convened physically, even if only people performing administrative functions, e.g. the chairman and the recording clerk are to be present at the place of the meeting, and the remaining persons entitled to exercise voting rights will participate in the shareholders’ meeting using electronic means of communication.
A significant part of the existing problems related to the technical issues of e-meetings has already been resolved. There is a wide selection of streaming applications (e.g. Skype, Zoom, Webex, Microsoft Teams) which allow visual identification and/or speaking, including lodging an objection during the meeting. Also, it is relatively easy to prepare an attendance list, record the meeting, prepare the minutes of the meeting and the attendance list; the list does not have to be signed by participants using electronic means of communication (Article 248 §2 of the Commercial Companies Code), but should be signed by the chairman and the recording clerk.
At the same time, some doubts related to e-meetings still persist. For example, there are still problems with the network connection or the appropriate signal strength – what happens if one of the shareholders leaves the meeting during the session due to technical problems? It seems that other shareholders should immediately adopt a resolution ordering a break until such shareholder returns to the online meeting, but if such a “break resolution” was not adopted due to the lack of the required majority – formally, the meeting should continue. This, in turn, may cause such excluded shareholder to object and eventually undertake a legal action against the resolution(s) adopted in his/her absence.
The issue of secret voting during online meeting may also cause controversy. Ultimately, the amended law allows secret vote during the online meeting, leaving detailed regulations in this regard to the companies. Present corporate practice shows that the requirement of secrecy can be met, for example, by generating an individual link for each voter, which would refer to the issue put to the vote, and would be visible only to the voter and the person counting the votes.
In the second part of the article we will discuss in more detail the rules of the online meeting.
by: Edyta Chmura-Szczecińska (legal trainee at BG Legal)