The COVID-19 epidemic is increasingly crippling the global economy. While more than half of humanity is currently confined, companies are not dormant.
Acknowledging that Monegasque companies would face economic difficulties as a result of the COVID-19 epidemic, the Government of Monaco decided from the end of March to put in place various measures to support them.
Given the current health situation, the concrete modalities of deconfinement still appear uncertain both in the Principality and in the rest of the world where foreign shareholders and directors of Monegasque companies could remain blocked.
Convening and holding general or a board of directors meetings
Insofar as companies may need to convene a general meeting or a board of directors meeting in the coming days or weeks, what solutions are available?
- General meetings and boards of directors in public limited companies (SAM)
The company's articles of association should be examined to find out whether a clause provides for the possibility of using videoconferencing for the holding of your boards of directors and/or general meetings.
If so, all the conditions provided for in the articles of association must be respected so that the board of directors or general meeting remotely held cannot be challenged.
If not, it would be worth considering amending the articles of association to allow more flexibility in the holding of boards of directors and/or general meetings by providing for the possibility of remote meetings or written consultation.
- General meetings in limited liability companies (SARL) and civil companies
Here again, the company's articles of association should be examined to determine how to convene and hold shareholders' meetings.
The written consultation of the shareholders, which is little used in practice but which allows a vote by circulate/written resolution if the articles of association provide for it, may be of interest in this period of lockdown.
The bill No 1014 of 21 April 2020 relating to the COVID-19 health crisis
On 24 April, the National Council (Monegasque Parliament) published on its website a bill reproducing part of draft bill No 249 and which aims in particular at softening the procedures for meetings of the corporate bodies of civil and commercial companies, economic interest groups, associations and foundations, during the Monegasque lockdown period (to date, the Ministerial Decision of 10 April 2020 has extended until 3 May 2020 the application of the travel restrictions to combat the spread of COVID-19 in the Principality as initially taken by Ministerial Decision of 17 March 2020).
Should this draft bill be turned into an Act, it may allow the holding of remote general meetings and/or board meetings, even in the cases where the articles of association do not provide for it.
This bill provides that it will be possible to convene a meeting of the corporate bodies without the requirement of the physical presence of its members.
Directors, shareholders or members, as the case may be, will be able to validly participate by means of a phone or audio-visual conference allowing the continuous and simultaneous retransmission of the proceedings.
These persons will be deemed present for the calculation of the quorum and majority rules.
The decisions may also be taken "by simple written consultation" (without a clause in the articles of association being necessary or being able to oppose it, but only in accordance with Monegasque law, except for the meeting approving the annual financial statements or amending the articles of association).
This bill provides that its provisions shall be retroactive to 18 March 2020.
However for now, it is just a bill. In any event, we would strongly recommend to provide for a precise mechanism in the articles of association to avoid any discussion and allow, even outside the lockdown period of the COVID-19 pandemic, the holding of remote general meetings and/or boards of directors meetings, in all legality.
Approving annual financial statements and applicable time limits
Many companies are due to hold a board of directors and/or a general meeting to approve their financial statements in the coming weeks.
What are the rules for approving the financial statements in commercial companies?
By way of reminder, the directors of commercial companies (in particular, the directors of public limited companies or "gérants" of limited liability companies) must convene, within six months of the end of a financial year, the general meeting in order for it to approve the financial statements of the past financial year.
For example, for a financial year ending on 31 December 2019, the general meeting must, in principle, be convened before 30 June 2020.
Then, within three months following the holding of this meeting, a list of documents, provided for by Monegasque law, including the approval or rejection by the general meeting of the shareholders of the annual financial statements, must be submitted to the Trade and Industry Register ("Répertoire du Commerce et de l’Industrie").
For example, for a financial year ending on 31 December 2019, the filing of these documents with the Trade and Industry Register must, in principle, be made before 30 September 2020.
Criminal sanctions (fines) might be incurred in case of failure to comply with these obligations.
Have these obligations been softened during the lockdown period?
Yes in three ways.
- On the administrative time limits
Act No 1.485 of 9 April 2020 on administrative time limits authorises the suspension for a period of 2 months (extendable), starting 18 March 2020, of all "time limits, in progress on that date, imposed on constituents, by legal or regulatory provisions, for filing an application or a statement, for formalising an act or for carrying out any other formality, registration, notification or publication".
- On the preparation of the annual financial statements and the management report
Bill No 1014 of 21 April 2020 provides that the time limits imposed by the articles of association of a legal entity on the boards of directors or "gérants" to prepare the annual financial statements and the management report for the past financial year are extended by two months.
- On the approval of the annual financial statements
Bill No 1014 of 21 April 2020 provides that the deadlines imposed by law or ordinance or by the articles of association of a legal entity to approve its annual financial statements for the past financial year or to convene the general meeting for such approval are extended by three months.
Consequently, should this bill No 1014 be enacted, this would mean that for a financial year ending 31 December 2019, the six-month deadline for approving the financial statements, extended by three months, could enable the shareholders' meeting to approve the company's financial statements until 30 September 2020.
However, it is likely that the softened procedures for convening and holding general meetings, as provided for in the bill, will no longer be in force at that date. Amending the articles of association on this point then makes perfect sense.