How to organize an annual general meeting online

How do stock corporations organize their annual general meeting during a pandemic? Some of our clients are leading the way by inviting their shareholders to online meetings. 

Stock corporations or limited partnerships convene their shareholders once a year to make key decisions, elect the supervisory board, approve restructurings, or distribute dividends. In 2022, just like in 2020 and 2021, Covid-19 and pandemic-related restrictions will force companies, as well as associations, to find alternative formats for their general meetings or members' assemblies. 

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The Legal Basis

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As early as late March 2020, the German Bundestag passed the Covid-19-G, a law to mitigate the consequences of the COVID-19 pandemic in civil, insolvency, and criminal procedural law. Article 2 Section 1 specifies measures in corporate, cooperative, association, foundation, and condominium law to combat the effects of the COVID-19 pandemic. For now, until August 31, 2022, meetings may be held as virtual general meetings without the physical presence of shareholders. However, certain conditions must be met:

• The entire meeting must be transmitted via video and audio
• Shareholders must be able to exercise their voting rights (or grant a proxy to do so)
• Shareholders must be able to ask questions 
• The option to object to a resolution of the general meeting must be provided in certain cases
  
  

How is an Annual General Meeting conducted virtually? 

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First, all shareholders or members are invited to the general meeting in due time. Participants can register with their personal identification number or designate a representative via a link in their invitation. 

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Speeches and presentations are transmitted to shareholders via our virtual platform. When it comes to voting, a window opens explaining the item to be voted on. Voting options are displayed as three clearly visible buttons: Approval | Rejection | Abstention. Committees, boards, or bodies are elected using ballot papers with a checkbox selection.

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Naturally, voting is anonymous. To ensure the election complies with the statutes, only logged-in and authenticated shareholders can cast their vote once. To ensure that votes and elections remain secret and secure in the virtual environment in the long term, GDPR-compliant data processing is a key feature. AirLST servers are located in Germany, ensuring that sensitive data, such as that collected during general meetings, meets the highest data protection standards. 

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Pitfalls

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General meetings are complex processes that significantly shape the company's future and must adhere to strict legal requirements. Therefore, the general meeting must be prepared precisely and in accordance with the articles of association. Where can pitfalls arise? 

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• Weighting of Votes
  In detailed fine-tuning, it must be clarified beforehand whose vote is weighted how. This is because a shareholder's vote can have different weightings depending on the volume of shares. 
• Provide opportunities for questions
  For votes to be legally valid, shareholders must be given the opportunity to ask questions. The easiest way to do this is via a live chat tool. However, questions can also be requested in advance. 
• Ensure Documentation
  To ensure that the resolutions of the general meeting are auditable, documentation must make the process traceable. 
• Rely on a reliable virtual platform
  General meetings have a high number of participants, and during voting, these participants generate a lot of traffic on the servers. Their capacities must be aligned with the planned general meeting and function fail-safe.

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Conclusion

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The legislator has created the conditions for virtual general meetings, thus providing a straightforward way to bring shareholders together even during contact restrictions or lockdowns. For those organizing general meetings, it is crucial to rely on a professional and reliable system that guarantees legally compliant and auditable processing in accordance with the GDPR. The conditions and requirements for physical meetings can also be implemented virtually using different means. Furthermore, experience from the last two years shows that virtual general meetings are organized more efficiently and agenda items can be dealt with in a shorter time.