Adjustment of the Regulations regarding Virtual Annual General Meetings in 2021

In times of Corona, ordinary, i.e. physical, annual general meetings of stock corporations will not be possible for the foreseeable future, even with a smaller group of shareholders. The legislator recognized the problem at an early stage in spring 2020, during the first "Corona wave", and by implementing the "Act on Measures in Company, Cooperative, Association, Foundation and Condominium Law to Combat the Effects of the Covid-19 Pandemic (COVID-19-GesG)" introduced the possibility of a (completely) virtual general meeting for stock corporations . The virtual general shareholders’ meeting has been greatly accepted in practice and has shaped shareholder meetings in 2020. The facilitations, originally limited until the end of 2020, were recently extended until December 31, 2021, the legislator thereby implementing reasonable changes as a reaction to criticism from practitioners. The amendments to the virtual annual general meeting are scheduled to come into force on March 1, 2021.

A quick summary of the changes:

• Shareholders must be granted a "right to ask questions" at a virtual annual general meeting and not just an "opportunity to ask questions" by means of electronic communication (cf. Section 1 (2) sentence 1 no. 3 COVID-19-GesR-G n.F.).

• Previously, the management board could decide at its own discretion which questions to answer and how to answer them. The discretion thus related to both the "whether" and the "how" of the answer. In addition, it could stipulate that questions must be submitted by electronic communication no later than two days before the meeting. Now the management board no longer has any discretion as to whether to answer questions, but "only" as to how to answer them (cf. Section 1 (2) sentence 2 HS. 1 COVID-19-GesR-G n.F.). It may still summarize questions and answers. Furthermore, the period for submitting questions has been reduced to one day (cf. Sec. 1 (2) sentence 2 HS. 2 COVID-19-GesR-G n.F.).

• Applications or election proposals from shareholders in the virtual annual general meeting are to be treated as if they were submitted (again) in the virtual annual general meeting. As the legal committee points out, the amendment incorporates into the statutory provision an approach practiced by many companies in the annual general meetings of 2020 which is often referred to as the "fictional solution". It takes the fact into account that it is not possible to submit an application (again) "in" the meeting (which is required according to general opinion) if shareholders participating electronically (Section 118 (1) sentence 2 of the German Stock Corporation Act (AktG)) are not granted the right to submit an application or if shareholders are only allowed to exercise their voting rights by means of electronic postal voting. However, the shareholder is required to prove his legitimacy and proper registration for the meeting, this also being the prerequisite for submitting a request at the attendance meeting.

Conclusion

The selective amendments are largely to be welcomed. In particular, the regulation regarding the "fictional solution" for shareholder applications provides clarity. The one-day deadline for submitting questions may be criticized: shareholders are assumedly better off with sufficiently prepared and, if necessary, more detailed response. Moreover, an interactive general debate did not take place in 2020 and will probably not take place in 2021 either.