"Corporate law in times of the coronavirus" is still a topic in 2021

By the German Act on measures in corporate law, the law of cooperatives, associations and foundations and residential property law to combat the effects of the COVID 19 pandemic" (Gesetz über Maßnahmen im Gesellschafts-, Genossenschafts-, Vereins-, Stiftungs- und Wohnungseigentumsrecht zur Bekämpfung der Auswirkungen der COVID-19-Pandemie,  which is officially abbreviated as “GesRuaCOVBekG”[!]) of 27 March 2020, the legislator has in particular made it easier to hold (general or shareholders') meetings and for corporate bodies to pass resolutions outside meetings. In practice, such "virtual" meetings and resolutions have proven to be largely unproblematic - and in some cases even advantageous (think of the costs of a general meeting of a listed public limited company with shareholders present). Use is also made of the extension of the "deadline" for the notification of transformations (the closing date of the balance sheet to be attached may be up to 12 months in the past instead of 8).

The Federal Ministry of Justice assumes - unfortunately probably rightly so - that the pandemic will not be over in 2021 either and that there is therefore still a need for the above-mentioned relief. It has therefore drafted an ordinance (official abbreviation: "GesRGenRCOVMVVV"), extending the validity of the regulations (Section 1 to 5 of the Act) until 31 December 2021. Section 8 of the Act opens up this possibility. It can be assumed that the ordinance will be issued after a vote in the Federal Government and comments from associations. It shall enter into force the day after its promulgation, which means that it is likely to happen well before the end of 2020.

This approach is to be welcomed in principle since it gives planning security. There is still the need for such relief, even though a large number of companies and organisations have now taken up the "suggestion" of the legislator and consultants and have amended their articles of association in order to simplify meetings and the adoption of resolutions.

However, the following should be noted with regard to the current draft:

So far, the ordinance only continues the regulations that have been in force up to now. Amendments, improvements or clarifications are not associated with this, or only to a very limited extent through the explanatory memorandum to the bill prepared by the responsible federal ministry [Referentenentwurf].

In particular, the provisions on the "virtual" shareholders' meeting in the case of the German private limited company (GmbH), which certainly raise a number of questions, are also only addressed very briefly (4 lines) in the draft explanatory memorandum, in that, as in the original explanatory memorandum, reference is made to the "carrying out of shareholders' resolutions". This shows once again that the regulatory authority is not clear about what it is actually regulating: Resolutions are "adopted", meetings are "carried out" (or more correctly "held"). Section 48(2) of the German Limited Liability Companies Act (GmbHG) - which will probably now be amended until December 31, 2021 - also speaks accordingly of the "holding of a meeting".

As we and others pointed out at the time, it must therefore continue to be assumed that the amendment of Section 48(2) GmbHG is about the adoption of resolutions without holding a meeting, i.e. by way of circulation. Therefore, it is still advisable to comply with the formalities of the "invitation to pass a resolution" in the same way as for an invitation to the meeting and to ensure that any quorum required by the Articles of Association is observed.

Regrettably, the unfortunate wording of the law is thus continued, according to which such a resolution is possible "without all shareholders" agreeing to it, instead of positively clarifying that a simple majority is sufficient. It would also have been nice if there had been an opportunity to clarify the relationship of this legislative amendment to any - not infrequent - provisions concerning the adoption of resolutions by way of circulation procedure in the respective articles of association. A prevailing opinion on all these questions or even a higher or supreme court ruling on the amended Section 48(2) GmbHG, is not evident, so that one cannot speak of an eloquent silence on the part of the regulatory authority.

With regard to general meetings of public limited companies under German law (AG), German partnerships limited by shares (Kommanditgesellschaft auf Aktien, KGaA) or Societas Europaea (SE), the reasons for the explanatory memorandum of the ordinance is not so monosyllabic; here, two longer paragraphs state, among other things, that companies should "only make use ofthe relief, if this appears necessary in view of the specific pandemic situation". The extension of the rules is therefore intended in particular to give companies "planning security" if they”want to hold” their general meetings "in the first months of the calendar year 2021". "Inaddition, the board should exercise its due and free discretion to answer as many of the questions submitted as possible.”

The question arises as to what the regulatory authority wants to and can achieve with these requirements it commented on with all their limitations and relativisations and, in particular, whether or not it creates "planning security" for the companies, especially since the further development of the pandemic is not foreseeable and therefore a restriction of any kind to general meetings held in the first months of 2021 is not appropriate. The regulatory authority will probably take the opportunity to add its own interpretation to the unchanged wording of the Act. It is then up to the practice to turn this into a legally secure procedure. Just as one would have wished for a few more words in the case of the GmbH, a few words less would perhaps have been better concerning the general meetings.