Article Post on 08 July 2020

The Rules Governing the Organisation of Shareholders’, Board of Directors, or Other Supervisory and Management Body Meetings in the Context of the Covid-19 Pandemic

_Despite the declaration of the end of the state of crisis in Luxembourg on 24 June 2020 relating to the COVID-19 pandemic (which had been declared by the Luxembourg government on 18 March 2020), some measures that had been taken to adapt corporate governance measures in response to the social distancing measures required to prevent the spread of COVID-19, and which had been taken by way of Grand Ducal regulations, have now been implemented into Luxembourg law.

On 20 March 2020, a Grand Ducal regulation was issued in order to introduce rules and measures governing the organisation of shareholders’, board of managers, or other supervisory and management body meetings (the ‘Regulation’). The aim of the Regulation was to adapt the rules regarding shareholders’ and management body meetings to the safety and social distancing measures recommended in the context of the COVID-19 pandemic until the end of the state of crisis.

On 20 June 2020, a bill of law N°7566 extending the measures concerning the holding of shareholders’ or management body’s meetings in companies and in other legal persons was voted by the Luxembourg Parliament (the ‘Law’). The Law replaces the Regulation and extends its term until after the end of the state of crisis and for an unlimited period of time.  

The Law provides that companies may hold their shareholders’ meetings without any physical meeting, even if the articles of association do not provide such measures and regardless of the number of participants in case of a shareholders’ meeting.

The shareholders may participate to such meetings, either:

  • By casting a vote in writing or electronically (this may be via an internet platform or by email for instance, to the extent that the identification of the shareholder is possible), to the extent that the full text of the resolutions was provided to them, or
  • By videoconference or other means of telecommunication allowing their identification.

The shareholders participating to the meeting by such means are considered present for the purpose of the quorum. A shareholder may also appoint a proxy for the purpose of participating at the shareholders’ meeting. These provisions are also applicable to the meetings of bondholders.

Indeed, article 450-1 of the amended law of 10 August 1915 on commercial companies (hereinafter the ‘Law of 1915’) provides for public limited liability companies that ‘If the articles of association so provide, are deemed to be present for the calculation of the quorum and the majority, the shareholders who participate in the meeting by videoconference or by telecommunication means allowing their identification. These means must meet technical characteristics guaranteeing effective participation in the meeting, the deliberations of which are continuously broadcast.’ According to this article, a public limited company that holds a general meeting by videoconference when the articles of association do not provide for it would therefore expose its directors to liability for violation of the articles of association of the company and the Law of 1915. The same problem is found with article 710-21 of the Law of 1915 governing limited liability companies. The Law allows participation by videoconference or telecommunication, even if the articles of association do not provide for such possibility.

According to article 710-17 of the Law of 1915, with regard to voting in writing or electronically on the basis of circular resolutions, only the legal provisions governing the limited liability company provide for the possibility of passing written resolutions in limited liability companies whose number of partners is not greater than 60. The purpose of the Law in that regard is therefore to facilitate governance measures and allow companies to use vote in writing or in electronic form for their meetings.

In case a company convened its shareholders’ meeting pursuant to the rules prior to the Regulation and if it wishes to hold the meeting in accordance with the Law, the company must publish its decision and if necessary notify it to its shareholders or partners or other participants in the form in which it had convened the meeting or by publication on its website no later than the third business day before the meeting.

The Law applies to both ordinary and extraordinary shareholders’ meetings, whereby the Law does not prevent other legal obligations applying, such as the obligation to hold meetings in relation to the amendment of articles of association before a Luxembourg notary.

For other meetings, such as meetings of the management or supervisory body of the company, similar provisions apply. According to the Law, notwithstanding any provision to the contrary in the articles of association, such meetings may take place by means of:

  • Written circular resolutions, or
  • Videoconference or other means of telecommunication.

The members of the body participating to meetings by such means are considered present for the purpose of the quorum.

The Law refers to article 3 of the law of 22 May 2020 extending the deadlines for filing and publishing annual accounts, consolidated accounts and related reports1, which provides that the annual general meeting of companies referred to in article 8 of the Commercial Code may be convened on a date which is within a period of nine months after the end of its financial year, so that it also applies to annual general meetings and meetings of other bodies held during this period.

The Law also extends the application of the provision mentioned in the Regulation to legal structures such as:

  • Non-profit associations and foundations (Associations sans but lucratif et fondations),
  • Agricultural associations (Associations agricoles),
  • Mutual societies (Mutuelles),
  • Economic interest groupings (Groupement d’intérêts économiques),
  • European economic interest groupings (Groupements d’intérêts économiques européens),
  • The Housing Fund (Fonds du Logement),
  • Co-ownership syndicates (Syndicats de copropriété),
  • The Institute of auditors (Institut des réviseurs d’entreprises), and
  • The Accountants’ association (Ordre des experts comptables)

This Law is applicable as of 25 June 2020, being the date of its publication in the Luxembourg official Gazette and the day after the end of the state of crisis in Luxembourg. Finally, the Law does not provide a time limit for its applicability.

1. Please see in that regard our article by following this link: https://www.wildgen.lu/our-insights/article/approval-filing-and-publication-annual-accounts-extension-deadlines

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