The general shareholders' meeting in 2020: what should you be aware of?
Under the new Companies and Associations Code, the general shareholders' meeting is still one of the most important annual recurring events. And like it was the case under the previous legislation, this meeting comes with a certain formalism.
Who will summon the meeting?
The general shareholders' meeting is summoned by the board of directors. Unless the articles of association provide otherwise, an individual director does not have this power. Also, shareholders do not have the power to summon the general shareholders' meeting, but there is one exception: shareholders can summon the general shareholders' meeting and put topics on the agenda when they have at least 10% of the total number of shares (for the BV) or when their shares represent at least 10% of the capital (for the NV).
Note that this is a loosening with respect to the previous legislation. The threshold then amounted to 20%.
If the shareholder(s) reach this quorum, the request can be submitted with the directors, who then have (like it was previously) three weeks to summon the general shareholders' meeting.
Additionally, the statutory auditor can also summon the general shareholders' meeting, more specifically in conflict situations. After all, there are some specific situations, foreseen by law, in which the general meeting should be summoned, e.g. in case of significant losses, repurchase own shares and quasi contributions.
How is the meeting summoned?
The general meeting in a BV is summoned through a convocation notice. Under the new legislation this is also possible by email.
For non-listed NV's the shareholders should be summoned through a notice in the Belgian Official Journal and the company's website. Further this should also be communicated via a national newspaper. This is not necessary for an 'ordinary shareholders meeting' whereby the agenda is limited to the approval of the annual accounts and granting discharge to the directors and statutory auditor. Holders of registered securities in an NV can also be summoned by email. Under the old companies' code, holders of registered securities should be summoned by registered mail in case all securities emitted by the company were registered. This obligation is removed.
This notice mentions place, date and hour of the meeting, as well as the agenda with the topics to be treated; this should be done at least 15 days before the general shareholders' meeting to the shareholders, directors and statutory auditor.
Who can come to the general meeting?
Clearly all shareholders with voting rights can be present, but also shareholders without voting rights. And also, the directors and the statutory auditor.
When there are bondholders, they can also participate, but only with a consultative vote.
The general meeting can be replaced by a written procedure. The conditions are strict, but not insurmountable for smaller companies: a) all shareholders should unanimously and in writing take all decisions and b) all decisions fall within the authority of the general meeting.
There is an exception to this last condition, namely when the decision has to be taken by authentic instrument. This is amongst others the case for capital increase or reduction, dissolution, merger, demerger and any other amendment of the articles of association. These decisions require the intervention of a notary and can therefore not be taken in written.
Participation through electronic communication means such as Skype or Zoom is also possible when foreseen in the articles of association. Besides, this is only possible for the shareholders: the directors and the statutory auditor cannot participate this way. Also, distance voting, prior to the general meeting, through a form, letter or the company's website is possible, but also only when allowed by the articles of association.
How does the meeting goes?
The chairman leads the meeting and has the so-called police over de meeting. This means that he or she gives or takes the floor. The chairman sticks to the agenda. This means that he/she cannot skip topics, but can in case of urgency add topics to the agenda. If all shareholders are present, it can be unanimously decided to modify the agenda.
The directors and the statutory auditor should only respond to questions relating to the agenda. They can only refuse in the interest of the company.
How are the voting rights exercised?
As a general rule, voting is secret. This is not necessary, but the shareholders can ask for it. The shareholders can be represented by a proxy holder (unless forbidden by the articles of associations). The articles of associations can also allow the shareholders to vote in advance and in writing.
Why all these formal rules?
The general shareholders' meeting (both the annual meeting and the other ones) is subject to a number of formal rules. These rules protect all stakeholders: the company, third parties (such as creditors) but also the shareholders themselves. The CAC has introduced some loosening, but the essential conditions remain.
A special powers COVID-19 decree already foresees in the possibility to postpone the general meeting until after the crisis and to held online, even if the articles of association prohibit this. Both derogations are optional. The derogations can be extended if it turns out that it will not be possible to follow the normal rules for convening, operating and voting the meeting after 3 May 2020.