Emergency law for AGMs via live stream
Many companies have their Annual General Meeting (AGM) scheduled in the near future. With the current law prescribing a physical meeting, many companies are facing quite the challenge. Last Friday, the Council of Ministers submitted an emergency bill to the Council of State. The purpose of this emergency bill is to enable companies and shareholders to meet online in a legally valid AGM. Corporate lawyer Sjoerd Yntema acknowledges the advantages but also warns of some dangers and shares some tips.
The annual general meeting: convocation and agenda
The management of a company is obliged to report to the shareholders at least once a year during the annual general meeting. The board convenes the AGM as prescribed by law and by the Articles of Association. For example, the convocation must take place at least 8 days before the meeting by means of a convocation letter. The convocation may also be sent by e-mail if the shareholders have consented to this, and it must include the items to be discussed at the meeting, i.e. the agenda.
Annual general meeting via live stream
The board may soon be able to hold a general meeting that can be attended via live stream (audio or video). A condition, however, is that the shareholders can submit questions during that meeting (or in advance) about, for example, the policy or the annual accounts to be approved, which will be answered during the actual meeting. Although resolutions will still be validly passed if a shareholder has not been able to participate in the meeting in an optimal manner, it is important for the management board that all shareholders are able to participate. If the management board does not think it will be possible to hold an annual general meeting that had already been scheduled, it may choose to postpone the meeting and the approval of the annual accounts.
Practical implementation, safety and tips
In order for the meeting to proceed in an orderly manner, it is important that it is well prepared. Therefore, the convocation should also include information about the medium that will be used (Zoom, Skype, etc.), the account to be created by the shareholders and the procedures for document sharing. Also make sure that only one person is in charge of the meeting. By appointing the chairman in advance, you avoid creating a ‘digital chicken coop’.
Moreover, recording the meeting makes it easier to take minutes. It does, however, pose certain security risks, given that various digital platforms used for video conferencing have recently been compromised due to privacy issues. This is something that the board – also considering the confidentiality of the information to be discussed at the general meeting – will have to take into account.
Entry into force
The bill has now been submitted to the Council of State for its opinion. Subsequently, both the House of Representatives and the Senate must approve the bill. Although it is expected that this process will be completed faster than usual, this is still a requirement for it to enter into force. We will keep you informed of all developments.