In light of the recent coronavirus outbreak and its related public health concerns, an increasing number of companies are looking for safer ways of holding shareholder meetings. Despite numerous advantages, virtual shareholder meetings were not legally possible in Austria and many other countries until recently. Who would have thought that a pandemic would bring about such fundamental changes in our legal system?
An interesting side effect of the COVID-19 pandemic has been the accelerated digital transformation of our lives. Some niche solutions are now mainstream. For example, people use video conferencing for work and for keeping in touch. Due to privacy and other legal concerns, legislators had previously postponed some regulations that accelerate our digital transformation. These solutions are now available. Your doctor can now send digital recipes directly to your pharmacy for you to just pick up your medication. Consultations with your doctor are now possible via video conferencing. Now the previous prohibition to hold virtual annual general meetings (AGMs) of shareholders has also been affected. The COVID-specific legislation has not only made it possible but even obligatory - at least until the end of 2020.
The legal requirements for virtual shareholder meetings
Specific ordinance details requirements for different legal entities and the respective types of general meetings and general assemblies. For listed companies, the rules are pretty straight forward:
- Participation to all parties has to be granted via a two-way audiovisual link in real-time from anywhere in the world;
- Due to technical reasons, it is sufficient if up to half of them can only participate via an audio link;
- The invitation to the meeting shall specify which organizational and technical requirements are applicable to participate;
- A means to ensure the identity of participants need to be provided;
- For a meeting with many participants: the availability of a mechanism that allows any and all to users to provide input, ask questions, and vote on resolutions through a proxy in advance. In this case, it is sufficient to offer oneway (passive) attendance via video and audio;
- If proxies are used, at least four independent ones need to be provided.
Why eyeson is ideal for virtual shareholder meetings
eyeson fits the legal framework surprisingly well. We offer real-time audiovisual communication from anywhere in the world, even under constrained bandwidth situations (1). We offer a Voice only Mode as an audio-only link (2). Requirements are simply a computer, smartphone, or tablet with internet access and a modern browser - no install, no plug-in, no hassle (3). To ensure attendants identity, users can distribute individual invitation links through email or any portal that identifies participants, e.g., e-Banking or USP (4). eyeson offers many ways to live stream a videoconference and record it for documentation purposes (5). Users can choose one of the provided proxies and advise them via videoconference if desired - with the added benefit of recording to document intent (5,6).
Add to that the fact that eyeson offers secure video conferencing at all times. And even better, as eyeson’s cloud-based video conferencing services are cloud provider agnostic, you can play it safe. Chose one of our European provider partners for a 100% European experience that offers 100% GDPR compliance. Or use your private cloud to lock out any outsiders.
How other countries are dealing with virtual shareholder meetings
While new in Austria, some countries have already provided legal ways to use virtual annual general meetings. In the UK the first virtual AGM was held in 2016 by Jimmy Choo PLC, a British luxury brand specializing in shoes and accessories, using the chat and voting app Lumi AGM mobile.
In December 2017, the Investment Association published a statement in support of hybrid AGM, but not wholly virtual AGMs. US public companies have increasingly allowed and utilized hybrid and virtual AGMs over the past few years. Bill Gates mentioned that trend in his recent LinkedIn interview on the ‘new normal’ and that Microsoft’s virtual AGM worked so well they will likely keep it that way in the future.
Virtual AGMs are already possible for French companies where regulations allow this, and the government is planning legislation to enable all companies to do so. In Canada, the possibilities vary by province and depend on the type of corporation and bylaws. For most cases, however, either a virtual or hybrid AGM is possible, typically requiring all remote attendants to communicate bidirectionally.
Temporary legislation to address the pandemic restrictions
Others have done it like Austria and rushed temporary legislation to address the pandemic restrictions. Germany laws already allowed for limited usage of hybrid AGMs depending on the company statute. Now the German government has decided to introduce some emergency legislation to enable streaming in Interim reports and holding AGM online even if the company’s statutes say otherwise. Italian Government in March passed decree—lawn. 18 that encourages remote voting and remote meetings for all kinds of companies including public ones.
Virtual AGMs are possible in Spain under Spanish regulations if allowed by company bylaws. Some Spanish companies already guarantee shareholders the right to participate in the meetings remotely and to remotely vote at AGMs. While the Netherlands doesn’t allow 100% virtual AGMs, companies suggest their shareholders use proxies instead. Not only for attending in person, but also to vote remotely. Most companies will also live-stream their AGMs.
The benefits of holding virtual AGMs
A more extensive analysis, including legal details, can be found in the Article ‘ How different markets are handling shareholder meetings during the COVID-19 coronavirus health emergency ’ If you look at the details of those country-specific regulations you will notice that where virtual AGMs are allowed, all requirements can be met with eyeson video conferencing services. Attendants and companies will also benefit from the ease of use and low bandwidth requirements. Additionally, they appreciate the scalability and dependability. And don’t forget, virtual AGMs not only save time and money but also improve the CO2 footprint by eliminating the need to travel.
Kurt J. Zuckermann is an expert in innovation processes and technology analysis. He has been consulting with many European and North American companies. With a special dedication to aiding startups, he is interested in a wide field of technologies. His focus lies in safety and security applications, AI, and green technologies.