2020 Shareholders’ Meetings: New rules to be enacted

In a context of national emergency, resulting from the spread of COVID-19, several decrees and government’s ordinances have been taken in order to restrict access to public space and to promote social distancing. These exceptional measures have an immediate impact on the meetings of the companies corporate bodies, especially at this time of the year when the General Shareholders’ Meetings have to go through the annual approval of the companies’ accounts. It goes without saying that these meetings cannot be physically held, as they are not part of the exceptions listed in the Decree of 23 March 2020, listing the exceptions under which people are allowed to move. As a result, and considering the current circumstances, the physical holding of Shareholders’ Meetings goes against the measures taken in order to limit the spread of the virus.

Furthermore, the emergency law of 23 March 2020 to address the COVID-19 epidemic features contains some interesting points about Corporate Law, which should be addressed by the Government through ordinances within the next three months starting from the promulgation of the law. These measures may apply retroactively starting from 12 March 2020, and their effects will be limited in time.

The legal texts also currently feature some provisions allowing the shareholders to attend meetings at distance.

Existing Rules

• Every shareholder may attend the meeting and vote at distance through a physical form or an electronic form for the société par actions (only if the statutes mention them when it comes to the electronic form). This form, addressed by the company to the shareholders who asked for it, allows them to vote on each resolution, in the order of their presentation during the meeting. Civil companies (sociétés civiles) and SARL may provide within their articles of association that the resolutions will be adopted through a written consultation or a unanimous acted by every shareholders;
• If the articles of association mention it and if the company has the ability to implement it, the shareholders may attend a meeting and vote by any means of telecommunication allowing their identification through a website exclusively dedicated to this purpose. The modalities of convocation, the manager’s report and the minutes of the meeting have to mention the way the meeting took place. This possibility is available for the sociétés par actions and the SARL, except for the latest, when the meeting deals with annual accounts or consolidated accounts.

When it comes to the SAS, it has to be noted that the provisions related to the Shareholder’ Meetings of the SA don’t apply. Only the articles of association may provide the conditions under which the decisions of the shareholders are taken.

It is also possible to postpone the Shareholders’General Meeting. This right belongs to those who called the meeting in the first place, but it may be obtained through a legal claim if the postponement of the meeting prevents an imminent damage. The Shareholders’ Meeting at the end of the financial year may also be postponed through a legal claim during the following 6 months.

New Rules to be enacted

The aforementioned emergency law authorizes the French Government to issue ordinances in order to simplify and adapt the conditions under which the meetings and the corporate bodies of private legal persons and other entities meet and deliberate, as well as the rules related to shareholders’ meetings.

The ordinance project dealing with the holding of Shareholders’ Meetings and Boards should be released within the next few days. However, the legislative report already states that the Government will be able to adapt French Corporate law for allowing the postponement or the continuation by dematerialized means of the Shareholders’ Meetings and the meetings of the executive bodies of private legal persons.

These new rules would exceptionally allow, as a way to ease the social distancing:

1. To override the necessity for the law or the articles of association to mention the use of the videoconference, for the company to resort to it for its Shareholders’ Meetings;

2. To provide easing to the physical presence of the members of the board during the Board deciding upon the closing of the accounts;

3. To hold closed Shareholders’ Meetings when decided by the Board, or the manager; and

4. To ease the modifications of the conditions in which the meetings are held (location, way of participating…) and the modifications of the mandatory formalities already achieved;

being provided that long distance voting will be taken into account for the quorum and majority calculations for each of these meetings.

It has to be noted that all forms of company would be concerned by the new rules to be enacted (until now only the sociétés par actions and the SARL had the ability to provide in their articles of associations meeting attendance through videoconference). These new rules aim to expand this possibility to all forms of company and to all meetings of legal persons more broadly.

Attention must be drawn on the fact that these new rules being currently in draft form, they are still subject to amendments. We will of course carefully follow their adoption process.