Coronavirus: Farewell to general meetings of shareholders?

1.    Does Covid-19 force companies to cancel general meetings of shareholders?

According to the homepage of the Federal Ministry of Social Affairs, Health, Care and Consumer Protection (www.sozialministerium.at), to prevent COVID-19 from spreading, it is completely prohibited to hold events as no more than five people may meet at any one place at the same time. For this reason, general meetings may not be held if more than five people are present. For most companies, especially public companies, we therefore recommend postponing the general meeting.

2.    Is it not possible to introduce access restrictions?

In principle, every shareholder is entitled to participate physically in the general meeting. Individual shareholders may be excluded from the general meeting if they significantly disrupt the proceedings, but not in order to comply with the limit on the number of participants set by the authorities.

3.    If the situation does not improve soon, could it become difficult for some companies to hold the annual general meeting? 

As long as there is a ban on assemblies, this takes precedence over the obligation to hold the general meeting. For this reason, there is no risk of fines being imposed if a company does not hold the annual general meeting within the statutory 8-month period after the end of the financial year. This is because the obligation to hold the annual general meeting is overruled by the obligations under the Epidemics Act. However, it would be in line with good corporate governance to publish the annual financial statements on the company website as soon as they have been finalised and audited and to make them available for shareholders to pick up a copy.

4.    Couldn't a stock corporation simply hold its general meeting using electronic means of communication?

Currently, the Austrian Stock Corporation Act does not permit a purely virtual general meeting in cyberspace. Also, electronic means of communication may only be used to accompany the general meeting if the articles of association permit this. If the articles of association do not permit this, the articles of association must first be amended accordingly at a general meeting that needs to be held physically.

5.    Do the current developments show that it is advisable to use electronic means of communication?

Current developments show that electronic means of communication contribute to ensuring that the company is able to make decisions at all times. Due to other risks, one should not rely exclusively on electronic means of communication; however, to do without them from the outset can be disadvantageous.

6.    Do special measures have to be taken at general meetings after the ban on assemblies has been lifted?

It is advisable to take adequate hygienic measures at general meetings, for example by providing hand sanitizers or distributing disinfectant wipes.