Covid-19 - Digital technologie in general meetings

Q1

Could you please provide some information about your country’s regulation on the use of digital technologies in general meeting?

1.1. Does your country allow a company to hold a meeting entirely digitally or not?

According to § 104 of the Austrian Stock Corporation Act (Aktiengesetz - “AktG”), stock corporations (Aktiengesellschaften - AG) must hold annual general meetings. These meetings are generally to be held physically.  However, due to the large number of shareholders, the AktG had already included standardized digital    tools prior to COVID-19. § 102 (3) AktG contains a non-exhaustive list naming satellite meetings, remote participation and remote voting. Pursuant to § 102 (4) AktG, the articles of incorporation may also provide or authorize the executive board (Vorstand) to provide that the annual general meeting be transmitted acoustically and, if necessary, also optically in real time for shareholders who are not present. In the case of a listed company, public transmission may also be provided for. The AktG does, however, not provide for the holding of the general meeting with the complete elimination of the physical meeting.

Annual general meetings of shareholders of a limited liability company (Gesellschaft mit beschränkter Haftung - GmbH) are also intended to be held physically. However, in case the participation of a notary public is not mandatory and if the articles of association expressly provide for this or if all shareholders agree, the meeting may also be held in another form (telephone conference, video conference).

For the purpose of preventing the spread of COVID-19, § 1 (1) of the Company Law COVID-19 Act (Gesellschaftsrechtliches COVID-19-Gesetz – “COVID-19-GesG”) prescribes that meetings of shareholders and members of bodies of a corporation, a partnership, a co-operative, a private foundation, an association, a mutual insurance association, a small mutual insurance association or a savings bank may also be held without the physical presence of the participants and that resolutions may also be passed in a different manner. Moreover, the COVID-19-GesG has extended the eight-month convocation period of the annual general meeting of a stock corporation to twelve months. The passing of resolutions on matters referred to in § 35 (1) Z 1 of the Austrian Law on Limited Liability Companies (GmbH-Gesetz – “GmbHG”) for limited liability companies has also been extended from eight to twelve months.

These provisions of the COVID-19-GesG cease to be effective on 31 December 2021.

1.2. How can a company identify who is participating and voting in the general meeting? Are there any barriers to the use of new digital technologies in the identification of shareholders?

In the case of a virtual meeting of a few participants who are known to each other personally and who have a video and audio connection, it is generally not considered as necessary to formally establish the identity of the participants. This also applies in the case of a mere acoustic connection of a participant if the other participants know the voice of the person concerned and can hear it well.

However, if there is reason to doubt the identity of a participant at a virtual meeting (e.g. because the participant is not personally known), the company shall verify the identity of this participant in an appropriate manner. This is regulated in § 2 (5) of the Company Law COVID-19 Regulation (Gesellschaftsrechtliche COVID-19-Verordnung – “COVID-19-GesV”). Such an appropriate manner is for instance asking the participant to hold a photo ID in front of the camera.

The COVID-19-GesV ceases to be effective on 31 December 2021.

§3 (4) COVID-19-GesV states that if the general meeting of a listed company or a company with registered shares or a company with more than 50 shareholders is transmitted in accordance with § 102 (4) AktG, the submission of a resolution, the casting of votes and the raising of an objection can only be made by a special proxy.

The prerequisites underlying electronic communication can be fulfilled by using special transmission and voting software. In the case of remote voting, shareholders transmit their votes to the company electronically.

This might be done by voting via the internet with individual access codes or other authentication or by email.

1.3. Does a requirement to identify the place of a meeting allow the company to specify an electronic address for a shareholder to access?

The annual general meeting of a stock corporation differs from other meetings primarily because of the larger group of participants; therefore, a conventional videoconference is only suitable to a limited extent.

The decision, whether a virtual meeting is to be held and which connection technology is to be used, is to be made by the body or member of the body who convened the meeting. Both, the interests of the stock corporation and the interests of the participants shall be given consideration (cf. § 2 (3) COVID-19-GesV).

Furthermore, the holding of a virtual general meeting pursuant to §2 or §3 (1) or (4) COVID-19-GesV does not require a basis in the articles of association of the stock corporation or limited liability company. This already follows from the fact, that these possibilities were only created by the COVID-19 Act and the Regulation and therefore cannot be provided in any articles of association.

Q2

Does your national legislation provide any barriers to the use of new digital technologies in the communication between issuers and shareholders or the participation and voting by shareholders in general meetings.?

2.1. Where meetings are held digitally (or a combination of digitally and in person), do there need to be particular protections to make sure shareholders can still ask questions?

According to § 2 COVID-19-GesV, it is permissible to hold a virtual meeting if it is possible to participate in the meeting from any location by means of an acoustic and optical two-way connection in real time. It must be possible for every participant to speak and take part in voting. If individual participants, but no more than half of the participants, do not have the technical means for an acoustic and optical connection to the virtual meeting or are unable or unwilling to use these means, it shall also be sufficient if the participants concerned are only connected to the assembly acoustically.

2.2. Can the company require shareholders to ask questions before the meeting? If questions can be asked at the meeting, how is this controlled? How must the company enable this? How do shareholders know what questions other shareholders are asking and how these are being answered? (If it is a meeting in person, they are able to hear the questions and answers.) Can the company group questions relating to a similar topic together and answer them together?

For the virtual conduct of the general meeting of a stock corporation, it is – according to § 3 (1) COVID-19-GesV – also sufficient if there is a possibility to participate in the meeting from any location by means of an acoustic and optical connection in real time, whereby the individual shareholder can only follow the course of the meeting but is otherwise enabled to make requests to speak during the meeting and to participate in voting.

Appropriate time limits for the submission of requests to speak (questions and motions for resolutions) may be set during the meeting.

The right to information and right to propose motions pursuant to §§118, 119 AktG can be exercised in such a way that the shareholders deliver written questions or motions electronically during a certain time slot to the company. These questions or motions then have to be read out by the chairman.

In this context, it is essential that shareholders must be able to react to developments in the meeting (e.g. through an alternative motion for a resolution or an additional question).

2.3. What is the position if a shareholder loses their connection to the meeting (is the meeting still valid)? What if the link being used by the company is lost, so all shareholders lose the link? Can the company just reinstate the link within a certain period of time and is that still a valid meeting?

§2 (6) COVID-19-GesV states that the company is only responsible for technical issues in its own technical sphere. Claims for damages and the contestation of resolutions can therefore generally only be asserted if technical issues are attributable to the sphere of the company. However, the smaller the group of participants in a virtual meeting, the more likely it is that a company will have to take recognizable connection issues, even of individual participants, as an opportunity to interrupt the digital meeting, in order to enable these participants to establish a new connection. The last sentence of § 3 (1) COVID-19-GesV is intended to ensure that certain stock corporation law regulations are additionally applicable. Communication disruptions during a virtual meeting can therefore only lead to a resolution being challenged, if the company is at fault (cf. §102 (5) second sentence AktG).

§102 (5) AktG stipulates that if, in case of a satellite meeting in accordance with §102 (3) AktG, communication between the meeting locations is disrupted, the chairperson shall interrupt the general meeting for the duration of the disruption. In all other cases of electronic participation pursuant to para. 3 as well as in the case of a transmission of the general meeting pursuant to para. 4, a shareholder may only derive a claim against the stock corporation from a disruption of communication if the company is at fault.

Q3

Please provide us with any other information or comment you deem important:

Additionally, the involvement of a notary public may be required for the validity of some transactions during a virtual meeting. Examples:  §120 (1) AktG and §49 (1) GmbHG. The fact that these authentications can also be carried out without the notary being present in person is derived from § 90a of the Austrian Notarial Code (Notariatsordnung - NO).