Corporate law 2.0

Options for virtual voting during the Covid-19 pandemic and afterwards

A commonly expressed desire is for the simplest possible procedure for voting and/or internal alingment and discussions in German companies. Legal requirements and thus the limits on flexibility depend not only on a company's legal form (limited liability company (GmbH), joint stock company (AG), partnership limited by shares (KGaA), European company(SE) or limited partnership (KG)) but also on the governing body (shareholders, supervisory board, management board) in which the voting and/or internal alingment and discussions is to take place. In everyday practice, a broad spectrum of options for conducting voting and/or internal alingment and discussions has developed that allow at least some increase in flexibility.

In response to the pandemic, German legislators have also created special rules, applicable until August 2022, in Article 2 of the Act on Mitigating the Impact of the Covid-19 Pandemic in Civil, Insolvency and Criminal Law – Covid-19 Act). The increased flexibility and reduction in travel and the number of in-person meetings will therefore still be of interest for shareholder meetings and annual general meetings in 2022. 

Below is a summary of the options available for passing resolutions remotely in the current legal environment, which gives particular attention to the provisions of the Covid-19 Act applicable to the legal forms that are most often encountered in advisory practice, i.e. GmbH, AG, KGaA, SE and KG.

Limited liability company (Gesellschaft mit beschränkter Haftung – GmbH)

Body

Shareholder meeting

Law

• in-person voting unless all shareholders have consented to a circular resolution procedure or the subject of the resolution
• option other than in-person and circular procedure only if provided in articles of association
• calling an in-person meeting with (all) shareholders having the right to dial in via video conference ^*

 

Covid-19 Act

• circular procedure permissible even without unanimous consent
• formal prerequisites for voting and decision-making authorisation regarding implementation of circular procedure unclear
• ranking of the Covid-19 Act compared with typical provisions of articles of association unclear
• provisions of articles of association that provide for virtual passage of resolutions have priority over the Covid-19 Act

Remarks

• use of circular voting procedure also permissible for resolutions that require notarisation under the Covid-19 Act^*
• applicability of Covid-19 Act to resolutions under German Reorganisation of Companies Act (Umwandlungsgesetz – UmwG) confirmed by Federal Court of Justice
• applicability of Covid-19 Act to mandatory meetings unclear

Body

Supervisory board (if any) 

Law

• voting at in-person meeting unless all members consent or do not object to another form; different provision possible in articles of association or rules of procedure
• unlike shareholders meeting, a pure video conference is deemed an in-person meeting ^*

Covid-19 Act

• not regulated

Remarks

• pandemic-related consent requirement for remote passage of resolutions possible

Body

Management board

Law

• not regulated

Covid-19 Act

• not regulated

Remarks

• notwithstanding rules of procedure or articles of association, voting not subject to form rules

Joint Stock Company (Aktiengesellschaft – AG)

Body

General meeting

Law

• voting at in-person meeting
• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot only if permissible under articles of association

Covid-19 Act

• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot possible even if not permissible under articles of association
• virtual general meeting without in-person participation and with participation remotely or via mail ballot possible
• Detailed explanation here
• Covid-19 Act has priority over typical provisions of articles of association^*

Remarks

• Covid-19 Act applies to all companies and content of resolutions^*
• virtual general meeting under Covid-19 Act held completely remotely not possible because some in-person participants necessary

Body

Supervisory board

Law

• voting at in-person meeting unless all members consent or do not object to another form; different provision possible in articles of association or rules of procedure
• unlike general meeting, video conference is deemed an in-person meeting^*

Covid-19 Act

• consent resolutions regarding simplifications under Covid-19 Act also possible without unanimous consent or provision in articles of association or rules of procedure outside of in-person meeting
• Covid-19 Act has priority over typical provisions of articles of association

Remarks

• pandemic-related consent requirement for remote passage of resolutions possible

Body

Management board

Law

• not regulated

Covid-19 Act

• not regulated

Remarks

• notwithstanding rules of procedure or articles of association, voting not subject to form rules

Partnership limited by shares (Kommanditgesellschaft auf Aktien – KGaA)

Body

General meeting

Law

• voting at in-person meetings
• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot only if permissible under articles of association

Covid-19 Act

• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot possible even if not permissible under articles of association
• virtual general meeting without in-person participation and with participation remotely or via mail ballot possible
• detailed presentation here
• Covid-19 Act has priority over typical provisions of articles of association^*

Remarks

• Covid-19 Act applies to all companies and subjects of resolutions^*
• virtual general meeting under Covid-19 Act held completely remotely not possible because some in-person participants necessary

Body

Supervisory board

Law

• voting at in-person meeting unless all members consent or do not object to another form; different provision possible in articles of association or rules of procedure
• unlike general meeting, a pure video conference is deemed an in-person meeting ^*

Covid-19 Act

• consent resolutions regarding simplifications under Covid-19 Act also possible without unanimous consent or provision in articles of association or rules of procedure outside of in-person meeting
• Covid-19 Act has priority over typical provisions of articles of association

Remarks

• pandemic-related consent requirement for remote passage of resolutions possible

Body

General partners

Law

• no resolutions necessary (even if more than one general partner), formless consent sufficient

Covid-19 Act

• not regulated

Remarks

• if general partner is a legal entity, (indirect) requirements apply to the governing instance (management board, director, etc.) of the relevant legal form

European company (Societas Europaea – SE) (dualistic)

Body

General meeting

Law

• voting at in-person meetings
• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot only if permissible under articles of association

Covid-19 Act

• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot possible even if not permissible under articles of association
• virtual general meeting without in-person participation and with participation remotely or via mail ballot possible
• detailed presentation here
• Covid-19 Act has priority over typical provisions of articles of association^*

Remarks

• Covid-19 Act applies to all companies and subjects of resolutions^*
• virtual general meeting under Covid-19 Act held completely remotely not possible because some in-person participants necessary

Body

Supervisory body (Supervisory board)

Law

• voting at in-person meeting unless all members consent or do not object to another form; different provision possible in articles of association or rules of procedure
• unlike general meeting, video or telephone conferences deemed in-person meetings^*

Covid-19 Act

• consent resolutions regarding simplifications under Covid-19 Act also possible without unanimous consent or provision in articles of association or rules of procedure outside of in-person meeting
• Covid-19 Act has priority over typical provisions of articles of association

Remarks

• pandemic-related consent requirement for remote passage of resolutions possible

Body

Governing instance (Management board)

Law

• not regulated

Covid-19 Act

• not regulated

Remarks

• voting outside in-person meetings only if permitted in articles of association or rules of procedure^*
• unlike general meeting, video or telephone conferences deemed in-person meetings^*

European company (Societas Europaea – SE) (monistic)

Body

General meeting

Law

• voting at in-person meetings
• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot only if permissible under articles of association

Covid-19 Act

• calling an in-person meeting with (all) shareholders entitled to participate remotely or via mail ballot possible even if not permissible under articles of association
• virtual general meeting without in-person participation and with participation remotely or via mail ballot possible
• detailed presentation here
• Covid-19 Act has priority over typical provisions of articles of association^*

Remarks

• Covid-19 Act applies to all companies and subjects of resolutions^*
• virtual general meeting under Covid-19 Act held completely remotely not possible because some in-person participants necessary

Body

Administrative board

Law

• voting at in-person meeting unless all members consent or do not object to another form; different provision possible in articles of association or rules of procedure
• unlike general meeting, video or telephone conferences deemed in-person meetings^*

Covid-19 Act

• not regulated

Remarks

• pandemic-related consent requirement for remote passage of resolutions possible

 

Limited partnership (Kommanditgesellschaft – KG)

Body

Shareholders

Law

• formless resolutions possible; exception: resolutions under German Reorganisation of Companies Act (Umwandlungsgesetz – UmwG
• mandatory in-person meeting and compliance with form requirements in articles of association common; divergence possible unanimously and formless

Covid-19 Act

• not regulated

Remarks

• articles of association often provide in-person meetings (as common practice) (mandatory for Investment KGs under KAGB)
• pandemic-related consent requirement for remote passage of resolutions or analogous application of Covid-19 Act for GmbH regarding simplifications of circular procedure possible
• Treatment of public companies (Publikumsgesellschaft) unclear

Body

General partners

Law

• no resolutions necessary (even if more than one general partner), formless consent sufficient

Covid-19 Act

• not regulated

Remarks

• if general partner is a legal entity, (indirect) requirements apply to the governing instance (management board, director, etc.) of the relevant legal form