Changes regarding the conduct of electronic and virtual assemblies during the Covid-19 pandemic
On the 28th of November 2020, the Act Determining the Intervention Measures to Mitigate the Consequences of the Second Wave of COVID-19 Epidemic (Official Gazette of the Republic of Slovenia, No. 175/20, hereinafter: “PKP6”) entered into force, amending also certain provisions of the Companies Act (ZGD-1) regarding the manner of holding general assemblies of public limited companies. The currently valid provisions of ZGD-1 regarding public limited companies permits the holding of electronic general assemblies (i.e. general assemblies, which shareholders may attend by electronic means, while the physical presence of a notary, chairman of the general assembly, and convener is still required), but only where the statute of the public limited company provides for the holding of electronic general assemblies. During the Covid-19 pandemic this arrangement proved problematic as the statutes of most public limited companies did not include provisions for electronic general assemblies and due to pandemic restrictions they could not convene in order to amend the statutes.
PKP6 has addressed this and amended Article 72 so that public limited companies may hold electronic general assemblies even if the company’s statute makes no provision for them. At the same time, Article 73 of PKP6 makes provision for virtual general assemblies, which requires no physical venue or in-person participation and is therefore conducted entirely by electronic means. However, virtual general assemblies can only take place if the statutory conditions are met, which include ensuring that the company transmits a real-time video feed and sound and that the electronic communication is secure.
In the case of both electronic and virtual general assemblies, the company’s management sets down the rules for holding general assemblies, including those governing the voting mechanism and shareholder identification. PKP6 sets down additional conditions and rules for holding general assemblies by electronic means or virtually.
PKP6 provisions governing electronic and virtual general assemblies also apply mutatis mutandis to limited partnerships and European joint-stock companies. Provisions governing meeting minutes of these general assemblies also apply to electronic and virtual general assemblies of limited liability companies. The wording of PKP6 suggests that the legislator also intended on providing limited liability companies with the option of holding of electronic and virtual assemblies, yet it is puzzling as to why it missed the opportunity to provide for the meaningful application of other PKP6 provisions governing electronic and virtual assemblies of limited liability companies. Concerning limited liability companies, Article 79 of the PKP6 also stipulates that shareholders may decide not to hold a general assembly (i.e. resolutions are passed at a correspondence meeting) by a simple majority of shareholder votes (otherwise, under Article 507 of ZGD-1, a majority vote of all shareholders is required for such a decision).
These provisions of the PKP6 apply only to assemblies convened during the Covid-19 pandemic. We consider this to be a welcome temporary measure, however, it would be worth considering making this arrangement available on a permanent basis. Namely, the rights of shareholders are adequately protected in such general assemblies, which is why more and more European countries are amending their legislation to reflect this.
Author: Ana Kastelec, Attorney-at-law
