Kategória: Corona

In order to prevent the spread of the coronavirus, events are completely prohibited and no more than five people at a time should meet at any one place in Austria. General meetings and shareholders’ meetings in which more than five people are supposed to participate are therefore currently not possible. While this situation may still be manageable for some companies with a small number of shareholders, this poses a particular problem for public companies, as shareholders are in principle free to be physically present at the general meeting.

To solve this problem, the Austrian legislator has made the following changes to the law as of 23.3.2020:

• For the duration of measures taken to prevent the dissemination of COVID-19 according to the COVID-19 Measures Act (Federal Law Gazette I 2020/12), meetings of shareholders and board members may be held without the physical presence of the participants (Article 32 § 1 (1) of the COVID-19 Company Law Act).

• The Federal Minister of Justice has been authorised to issue ordinances laying down more detailed rules on implementation which ensure a comparable quality of decision-making.

The provisions on implementation without physical presence take precedence as lex specialis over deviating provisions in the articles of association. The use of technical means of communication, such as videoconferencing, should make it possible to achieve a comparable quality of decision-making even without holding a meeting in person. Therefore, a legal basis for virtual meetings and other forms of decision-making (e.g. written votes) is to be created on a temporary basis, whereby the detailed regulations for individual or all legal forms of an ordinance are reserved for the Federal Minister of Justice.

However, current developments clearly show that electronic means of communication make an effective contribution to maintaining the ability of companies to act at all times. It remains to be seen whether the current predicament will provide the desirable impetus for a sustainable modernisation and technologisation of the legal framework in this area.

The Corona virus also leads to exceptional circumstances for companies in the field of antitrust law. The European competition authorities have recognised this and issued a joint statement on 23 March 2020 on possible relaxations but also with warnings (link to download the statement on the BKartA website). The authorities, however, are promising easing, but also explicitly warn against exploiting the  special situation for inflated health prices. 

We summarize the antitrust significance of the Corona crisis below:

Relaxation of antitrust law

According to the joint statement, the authorities are aware of the social and economic consequences of the Corona virus. In order to ensure the distribution of scarce products, cooperation between competitors is likely to be possible. If there are concerns, companies willing to act could contact the competition authorities. In Germany, the Federal Minister of Economics has already publicly suggested that antitrust law should be relaxed, at least for retail chains, and that cooperation between the food industry and retailers should be allowed because of the border closures. The situation in the United Kingdom is wider, where food retailers are already allowed to exchange information on stocks and work together on transport and storage capacities and personnel to ensure deliveries.

Relationship with competitors

The Corona-crisis itself does not give an ’emergency right’ for antitrust violations. Coordinated action with competitors remain critical from an antitrust point of view. For example, discussions and agreements between competitors to deal with the crisis are  regarded as restrictive of competition, e.g. by raising prices for increased costs or concerted rejections of supplier/customer claims. This also applies, of course, when competitors meet in associations. There is a great danger here that the common need will result in a prohibited agreement. Companies should therefore, as before Corona, verify the use of contact with competitors for their admissibility under antitrust law. Discussions, for example, on possible protection and hygiene measures in companies may be permitted.  We are happy to assist you in clarifying doubts.

Influence on dealers’ prices

The authorities make it also clear in the joint statement that manufacturers with price caps may force their dealers not to exploit the situation for ‘unjustified price increases’. With regard to pricelimits, the prohibition on cartels continues to apply. Suppliers can still issue non-binding price recommendations. However, these must not have an impact, e.g. by incentives or threatened disadvantages such as fixed prices. 

Price abuse

In the joint statement, the authorities explicitly warn against exploiting the situation for inflated prices, in the health sector in the field of health. The lack of  important supply products  and supply chain problems is already leading companies to significantly increase prices for some products due to the huge demand. For example, disinfectant products are often charged many times the average price. Such practices are closely monitored by the antitrust authorities. In Germany, above all, dominant companies are subject to special conduct obligations, but every other company is also subject to the limits of usury, which is a criminal offense in Germany.

Scarce goods

If Corona leads to the scarcity of certain products in the case of dominant companies, these companies must supply their customers without discrimination.

Mergers

Merger control requires companies to expect longer waiting times. Several competition authorities have already announced delays. For this reason, for example, both the Federal Cartel Office and the European Commission are asking companies and their representatives to reconsider whether a procedure must be submitted and to postpone notifications as far as possible Link to the communication from the Federal Cartel Office / Link to the communication of the EU Commission.

Summary

• If your products or services are systemically relevant, there is the possibility of easing antitrust restrictions in case of difficulties.
• However, under these circumstances the control of the competition authorities is also more intensive.
• In this crisis situation, price increases must be examined very closely and the drivers for this should be documented.

We are happy to assist you in clarifying doubts. Above all, the actlegal team wishes you and your families to come through this extraordinary time healthy.

Actions aimed at quelling the spread of COVID-19, such as border closures, flight cancellations and severe restrictions on gatherings and travel, may have a massive impact on business operations, especially when it comes to resolutions adopted by shareholders, management boards and supervisory boards.

If resolutions cannot be passed by the shareholders meeting or the management board, it may have a significant adverse impact on the company’s daily business.

With this alert, we want to offer shareholders and members of corporate bodies some insight on solutions that may help mitigate the impact of the state of epidemic, as well as an overview of the amendments to the Commercial Companies Code, which are about to be introduced as part of the so-called “Anti-Crisis Shield.”

Supervisory board

It might be easier for a supervisory board to operate if the following options are applied:
– passing written resolutions by circulation;
– voting on resolutions through electronic means;
– proxy voting (in writing).

The above options are available only if permitted by the company’s articles of association.

Works are underway to change the above as part of the so-called “Anti-Crisis Shield.” Based on the published draft bill amending the “Act on Special Solutions Related to Prevention and Combating of COVID-19, Other Infectious Diseases and Crisis Situations Arising from them,” as well as amending selected other acts (the “Draft Bill”), it would be possible to pass resolutions in the aforesaid manners with no need to define the basis for such action in the company’s articles of association (unless the articles of association expressly exclude such options).

It should be noted that resolutions on matters put on the agenda during a supervisory board meeting, election of the supervisory board president or deputy president, appointment of a management board member, and dismissal or suspension of such individuals cannot be adopted by circulation or through electronic means. The Anti-Crisis Shield is going to change the regulations to allow these resolutions to be passed in the manners listed above.

Management board

At present, there are no regulations that would explicitly allow a management board to pass resolutions by circulation or through electronic means (e.g. during a videoconference). With much debate surrounding this way of adopting resolutions, it is recommended to comprehensively regulate the manner of holding management board meetings in the articles of association.

Pursuant to the Draft Bill, the lawmakers pledge to allow management board members to:
– attend meetings through electronic means (unless the company’s articles of association expressly exclude this option);
– pass resolutions by circulation or through electronic means (unless the company’s articles of association expressly exclude this option);
– vote in writing by delegating the voting power to another management board member (unless the company’s articles of association expressly exclude this option).

These changes have yet to be adopted.

Meeting of shareholders

Shareholders meetings may only be held in Poland, and should take place in the city/town where the company’s registered office in situated or at a different location, as specified in the company’s articles of association or agreed upon by all shareholders.

Shareholders who are unable to attend a meeting in person may use the following solutions:

1) Proxy voting
A shareholder may appoint a proxy who will attend the meeting and vote on the shareholder’s behalf (unless applicable laws or the articles of association impose any restrictions in that respect).
A proxy should be granted in writing or will otherwise be null and void.
The company’s management board members and employees cannot attend a shareholders meeting in the capacity of a proxy.

2) Voting in writing (in a private limited liability company)
In the case of a private limited liability company, shareholders can pass resolutions in writing, i.e. by:
– expressing a written consent for a resolution to be adopted; or
– holding a vote on a resolution in writing, following all shareholders’ approval of such voting procedure.

A vote in writing may be held irrespective of the place where the shareholders are when casting a vote.

Not all resolutions may be adopted by circulation, though. Voting in writing is not an option in case voting secrecy is required (e.g. in case of a resolution on dismissal of a management board member or other HR issues).

3) Attending a meeting through electronic means

A shareholder may attend a shareholders meeting through electronic means (videoconference, teleconference, etc.). However, as things stand now, this is a viable option only if the articles of association allow the possibility to hold meeting in such way.

Holding a shareholders meeting through electronic means (with no need for physical presence) is allowed only if real-time broadcast from the meeting is available, with the absent shareholders being able to communicate and speak during the meeting in real time.

However, this format of a shareholders meeting is not equivalent a virtual meeting. This means that the following rules apply to meetings held through electronic means:
– a meeting should be held in a specific venue in Poland, determined in accordance with the Commercial Companies Code and the company’s articles of association;
– the chairperson and the clerk (or a notary public, if the notarial form is required for minutes from the meeting) must be present at the meeting, with only the shareholders being allowed to communicate electronically;
– written minutes from the meeting are required.

Shareholders may also attend and vote at meetings held through electronic means by proxies, in accordance with the rules specified above.

4) Using the IT system

Shareholders may make decisions using the model resolution available in the IT system but this option is only available to private limited liability companies established through the IT system.

There is no need to hold a formal shareholders meeting in order to pass this type of resolution, with the only condition for its valid adoption being that all the shareholders should vote by submitting a relevant statement through the IT system.

The above-mentioned voting statements must be confirmed with an electronic signature, a qualified electronic signature or a trusted signature.

Annual shareholders meeting

The Draft Bill includes solutions aimed at helping companies to meet the deadline to hold an annual shareholders meeting, at which shareholders approve the company’s financial statements for the previous financial year.

Pursuant to the Commercial Companies Code, all annual shareholders meetings should take place within six months after the end of each financial year. The Draft Bill includes a provision according to which the minister competent to handle public finance affairs would be authorized to issue a regulation entitling him/her to postpone (on a discretionary basis) the deadlines for the approval of financial statements in case of the state of epidemic threat or the state of epidemic, considering the need to ensure proper performance of obligations in that respect (it needs to be noted here that on March 20, 2020, the Health Minister announced the state of epidemic in Poland). If the minister chooses to issue a regulation setting a new deadline for the fulfilment of obligations related to the approval of financial statements, falling more than six months after the end of a financial year, annual shareholders meetings should be held no later than on the date specified in such regulation.

Remuneration policy

The Draft Bill also aims to revise the Act of October 16, 2019 on Amendments to the Act on Public Offerings and Conditions for Introduction of Financial Instruments into Organized Trading, and on Public Companies, and Amendments to Selected Other Acts. Based on the intended changes, the annual shareholders meeting of a public company (i.e. a company with its registered office in Poland, with at least one share admitted to trading on a regulated market) would be obliged to pass a resolution on the remuneration policy applicable to the management board and supervisory board members until August 31, 2020.

Many of the solutions outlined above may significantly facilitate and expedite the operations of corporate bodies and daily business, both during the epidemic and afterwards.

Some of these options are only available if they are permitted under the articles of association, so now might be a good time to insert relevant provisions into the company’s constitutional documents or grant relevant proxies.

Our corporate law team is available to answer any questions you might have.