How do public companies organize the annual general meeting during a pandemic? Some of our clients do it and invite their shareholders to online meetings. 

Stock corporations or limited partnerships convene their shareholders once a year to make key decisions, elect the board of directors, decide on restructurings or pay dividends. Covid-19 and the pandemic-related restrictions will force companies and associations to find alternative formats for their AGMs or general meetings in 2022, as they did in 2020 and 2021. 

The legal basis

At the end of March 2020, the German Bundestag passed the Act to Mitigate the Consequences of the COVID-19 Pandemic in Civil, Insolvency, and Criminal Procedure Law, which aims to mitigate the economic consequences of the pandemic. Article 2 §1 sets out the Law on Measures to Mitigate the Effects of the COVID-19 Pandemic. For the time being, until 31.08.2022, meetings may be held without the physical presence of shareholders as virtual general meetings. In doing so, some conditions must be met:

• The entire meeting must be broadcast in sound and vision.
• Shareholders must exercise their voting rights (or give the proxy).
• Shareholders must be able to ask questions. 
• The Organizer must give the possibility to object to a resolution of the annual general meeting in some instances.
  

How is an annual general meeting conducted virtually? 

First, all shareholders or members are invited to the AGM in due time. Via a link in their invitation, participants can register with their identification number or appoint a proxy. 

Speeches and presentations are transmitted to the shareholders via our virtual platform. If a vote is taken, a window opens explaining the point to be voted on. The voting options are displayed in three visible buttons: Agree | Disagree | Abstain. Committees, boards, or committees are elected via tick-box voting lists.
Of course, voting is anonymous. To ensure that the election complies with the Articles of Association, only logged-in and authenticated shareholders can vote once. To ensure that votes and elections are also secret and secure in the long term in the virtual world, GDPR compliant data processing is a key feature. The AirLST servers are located in Germany, so sensitive data such as that collected at general meetings comply with the highest data protection regulations. 

Pitfalls

Annual general meetings are complex processes that significantly impact the company's future and must follow strict legal guidelines. Therefore, the general meeting must be prepared precisely and following the articles of association. Where can there be stumbling blocks? 

The weighting of votes: In detailed fine-tuning, it must be clarified in advance whose vote is weighted how. Depending on the volume of shares, a shareholder's vote may be weighted differently. 

Set up possibilities for queries: For votes to be accepted in a legally secure manner, shareholders must be allowed to ask questions. The easiest way to do this is via a live chat tool. However, organizers can also request questions in advance. 

Ensure documentation: Documentation must make the process comprehensible to ensure that the general meeting resolutions are audit-proof. 

Count on a reliable virtual platform: Annual general meetings have a large number of participants, and during the voting, these participants generate a lot of traffic on the servers. Their capacities must be geared to the planned AGM and function in a fail-safe manner.

Conclusion

The law has created the conditions for virtual general meetings and thus an uncomplicated possibility to bring shareholders together even during contact restrictions or lockdown. It is essential for the organizers of general meetings to rely on a professional and reliable system that guarantees legal and audit-proof processing following the GDPR. The conditions and requirements for physical meetings can also be implemented in the virtual world by other means. Experience from the last two years also shows that virtual general meetings are organized more efficiently, and the program items can be dealt with in less time.