Organization of shareholders’ meetings and meetings of other corporate bodies in time of lockdown

In a context of national emergency due to the fight against the spread of COVID-19, several decrees and orders were issued to restrict access to public spaces and to foster social distancing. These exceptional measures obviously have an impact on the meetings of the corporate bodies of the companies and more particularly on the organization of Shareholders’ Meetings in a seasonal context of annual approval of accounts. In any event, the physical holding of Shareholders’ Meetings is not mentioned as one of the exceptions listed by the decree of March 23, 2020 under which people are authorized to travel and, in light of current circumstances, would be contrary to the provisions taken to limit the spread of the virus.

In this context, the emergency law of March 23, 2020 to deal with the COVID-19 epidemic[1] allowed the government to issue, on March 25, 2020, several orders, including two in the field of company law[2]. These orders, which apply, in particular, to commercial and civil companies and EIGs, enable to adapt the rules relating to the meeting of their corporate bodies and shareholders’ meetings (I) and to the closing and approval of financial accounts (II).

This note does not deal with measures specific to listed companies or companies with bearer securities.

I.               MEASURES CONCERNING SHAREHOLDERS MEETINGS AND OTHER CORPORATE BODIES

The measures set out below are applicable to shareholders’ meetings and meetings of administrative, supervisory and management bodies held as from March 12, 2020 and until July 31, 2020, unless this period is extended to a date set by decree and no later than November 30, 2020.

A decree of April 10, 2020 specifies the conditions of application of the measures relating in particular to the general meetings of limited liability companies and certain joint stock companies, held, for the most part, between March 12, 2020 and July 31, 2020[3].

1.              Measures concerning shareholders’ meetings

1.1          Convening and information rules

For all entities covered by the order, the sending of documents or information to a shareholder who so requests in advance of the meeting may be validly made by electronic message, provided that the said shareholder indicates in his or her request the electronic address to which such communication may be made.

To our knowledge, the new set of rules does not contain specific provision regarding the convening of the corporate bodies of unlisted companies. Therefore, for those companies, the usual rules (legal or statutory) apply.

1.2          Rules of attendance and deliberation

-If the place of the meeting is affected, on the date of the convening notice or on the date of the meeting, by an administrative measure restricting or prohibiting collective gatherings for health reasons, the competent body to convene the meeting (or, on delegation[4], the legal representative) may decide that the meeting will be held without the presence (physical or by means of telephone or audiovisual conference call) of the persons entitled to attend. In this case, members may validly participate or vote at the meeting in accordance with the other procedures provided for in the texts that govern it, as amended and supplemented by the exceptional measures taken in the context of the epidemic (for example, for public limited companies: postal or electronic voting or proxy). They must then be given information (date and place of the meeting, conditions under which they will be able to exercise all their rights).

  In this case, the decree of April 10, 2020 specifies, for certain joint stock companies, the following derogatory rules:

  • Concerning mandates with an indication of a representative (referred to in I of article L. 225-106 of the French Commercial Code):
    • These mandates (including those given by electronic means[5]) may validly be received by the company up to the 4th day prior to the date of the meeting;
    • The proxy holder shall send the company instructions concerning the exercise of the mandates at his disposal, using the form for postal votes, by electronic message to the electronic address indicated by the company, no later than the 4th day prior to the date of the meeting.
  • Concerning the Bureau of the meeting[6]:
    • If the chairman of the board of directors (BOD) or of the supervisory board (SB) or, in his absence, the person designated by the articles of association, cannot chair the meeting, the meeting shall be chaired by the person designated for this purpose by the BOD or the SB from among its members, or in the event of unavailability, from among the corporate officers[7];
    • For meetings convened after April 12, 2020, the body competent to convene the meeting (or its delegate) shall appoint two scrutineers “whom it shall endeavor to choose” from among the shareholders; failing this, the scrutineers may be chosen from outside the shareholders[8].
    • The members of the meetings shall be informed, as soon as possible and by any means, of the identity and capacity of the persons appointed.

-Irrespective of the provisions of the company’s articles of association and the agenda of the meeting, the competent body to convene the meeting (or the legal representative acting under delegation) may decide:

  • to take into account, in the calculation of the quorum and the majority, the votes of shareholders participating in the meeting by telephone or audiovisual conference call allowing their identification. These means of communication must at least transmit the votes of the participants, allow their identification and satisfy the technical characteristics allowing the continuous and simultaneous retransmission of the deliberations[9];
  • to resort to written consultation when the law allows it (in particular for civil companies, SARLs and SNCs).
  • If the competent body decides to take one or other of these measures (meeting without the presence of members, or by telephone or audio-visual conference, or written consultation) and if all or part of the procedures for convening the meeting have already been carried out prior to this decision, the participants in the meeting must be informed at least three working days before the date of the meeting, without the need to renew the formalities for convening the meeting. Such changes shall not constitute an irregularity in the convening of the meeting.

-The minutes of the general meeting must mention:

  • the use of one of the above methods of participation (meeting without the presence of members, or by telephone or audiovisual conference, or written consultation),
  • the nature of the administrative measure referred to above, when the meeting was held without the presence of the persons entitled to attend.

– As part of the measures designed to ease the holding of meetings in the context of the Covid-19 epidemic, the decree of April 10, 2020 also specifies that the body competent to convene the meeting (or, on delegation, the legal representative) may decide:

  • for all entities covered by order n° 2020-321 of March 25, 2020:
    • in the event of a postal vote permitted by law, the articles of association or the contract of issuance: the possibility for the members of the meeting to send their voting instructions, where applicable in the form provided for by the legal provisions governing the meeting, the articles of association or the contract of issuance, by electronic message to the electronic address indicated for this purpose in the convening notice;
    • in the event of representation permitted by law, the articles of association or the contract of issuance: the possibility for the members of the meeting to send their mandates by electronic message to the electronic address indicated for this purpose in the convening notice.
  • for limited liability companies and certain joint stock companies, without the need for a provision in their articles of association:
    • the use of electronic voting, under the conditions provided for by the texts that govern them[10].

2.              Measures concerning the administrative, supervisory and management bodies

– Regardless the provisions of the company’s articles of association and the agenda of the administrative, supervisory or management bodies:

  • the members of the said body shall be deemed to be present at the meeting of that body if they participate by telephone or audiovisual conference call enabling them to be identified and guaranteeing their effective participation. These means of communication must at least transmit the voice of the participants and satisfy the technical characteristics allowing continuous and simultaneous retransmission of the deliberations;
  • the decisions of these bodies may be taken by written consultation under conditions ensuring collegial deliberation.

II.             MEASURES CONCERNING THE DELIBERATIONS OF THE SHAREHOLDERS’ MEETINGS AND GOVERNING BODIES ON FINANCIAL ACCOUNTS

– The legal or statutory period for approving the financial accounts and the documents attached thereto or for convening the shareholders’ meeting responsible for such approval is extended by 3 months.

  • This measure concerns all companies closing their accounts between September 30, 2019 and the expiry of one month after the date of cessation of the state of health emergency (it does not apply to companies whose statutory auditor’s report was issued before March 12, 2020).

– The legal deadline for the management bodies to prepare the provisional management documents provided for in Article L. 232-2 of the French Commercial Code is extended by 2 months.

  • This measure applies to documents relating to accounts or semesters closed between November 30, 2019 and the expiry of one month after the date of cessation of the state of health emergency.

-The legal deadline granted to the Management Board to present to the Supervisory Board the financial statements and reports provided for in Article L. 225-100 of the French Commercial Code is extended by 3 months.

  • This measure concerns all companies closing their accounts between December 31, 2019 and the expiry of one month after the date of cessation of the state of health emergency (it does not apply to companies whose statutory auditor’s report was issued before March 12, 2020).

 

[1] Emergency law n° 2020-290 of March 23, 2020 dealing with the covid-19 epidemic

[2] Order n° 2020-318 of March 25, 2020 adapting the rules relating to the preparation, decree, audit, review, approval and publication of accounts and other documents and information that legal persons and entities without legal personality under private law are required to file or publish in the context of the covid-19 epidemic

Order n° 2020-321 of March 25, 2020 adapting the rules for meetings and deliberations of the shareholders’ meetings and governing bodies of legal persons and entities without legal personality under private law due to the covid-19 epidemic

[3] Decree n° 2020-418 of April 10, 2020 adapting the rules of meeting and deliberation of the assemblies and governing bodies of legal persons and entities without legal personality under private law due to the covid-19 epidemic.

[4] This delegation must be in writing and specify its duration, as well as the identity and capacity of the delegatee (art. 2 of decree n° 2020-418 of April 10, 2020, applicable as of April 12, 2020).

[5] In principle, these powers can reach the company up to the day before the general meeting (article R. 225-80 of the French Commercial Code).

[6] The measures concerning the bureau of the meeting may be supplemented by a new decree.

[7] This provision concerns meetings of SAs, SCAs and SEs, as well as special meetings of holders of investment certificates and meetings of holders of non-voting preference shares.

[8] This provision concerns meetings referred to in Note 7, as well as meetings of bondholders, meetings of holders of equity securities and meetings of holders of securities giving access to capital.

[9] Meetings of joint-stock companies and meetings of bondholders for which this form of participation was already provided for by law must continue to comply with the technical characteristics laid down by the texts governing them.

[10] This measure concerns meetings of limited liability companies (SARL) or certain joint-stock companies, as well as meetings of bondholders, holders of equity securities and holders of securities giving access to the capital, under the conditions provided for by the provisions governing them (article R.223-20-1 of the French Commercial Code for SARL, R. 225-61 for joint-stock companies and R. 228-68 for meetings of bondholders, holders of equity securities and holders of securities giving access to the capital).