Brussels: Exceptional Measures for Functioning of Corporate Bodies during COVID-19

14 Apr 2020

Belgian Royal Decree N°4 Of 9th April 2020 Introduces Exceptional Measures For The Functioning Of Corporate Bodies During The COVID-19 Pandemic

On 9th April 2020, Royal Decree No. 4 setting out various provisions in relation to co-ownership and the law relating to companies and associations in the context of the fight against the Covid-19 pandemic was published in the Belgian State Gazette (“Royal Decree No. 4”).

Royal Decree No. 4 introduces a number of exceptional and temporary measures aimed at, inter alia, ensuring the smooth functioning of management bodies and general meetings of companies, and associations during the pandemic.

Royal Decree No. 4 makes it possible, under certain conditions, for the management body of a company or an association, to:

  • hold a general meeting of shareholders or members without physical presence, by requesting shareholders or members to either cast their votes in advance or appoint a proxy in advance of the meeting;
  • postpone a general meeting of shareholders or members;
  • hold meetings of the management body remotely or take unanimous written decisions,

even when such modalities are not provided for in, or are expressly prohibited, by the articles of association.

SCOPE OF ROYAL DECREE NO. 4

Royal Decree No. 4 applies, inter alia, to all forms of companies, non-profit organisations, legal entities governed by the Belgian Code of Companies and Associations.

The exceptional measures introduced by Royal Decree No. 4 are of a temporary nature and apply retroactively from the 1st March to the 3rd May 2020. The duration of the exceptional measures may be further extended by Royal Decree if the circumstances so warrant.

Companies and associations which have already convened a meeting of their management body and/or their general meeting, at the time of entry into force of Royal Decree No. 4, may nevertheless make use of the exceptional measures contained therein.

The measures may also be applied for meetings which are convened before 3rd May 2020 but which are to be held after such date.

HOLDING A GENERAL MEETING WITHOUT PHYSICAL ATTENDANCE

Royal Decree No. 4 allows the management body to forbid the physical attendance of the shareholders or members at a general meeting. In such case, the management body may, regardless of any statutory authorization, compel the participants of a general meeting to exercise their rights at the general meeting, either:

  • by casting their votes in advance of the meeting. Such votes need to be exercised trough a voting form or via a website. It is however necessary that the voting form or website contain all proposed resolutions to be addressed during the meeting; or
  • by granting a proxy in advance of the meeting to a person designated by the management body. Such designated proxyholder may only vote on behalf of the member or the shareholders according to the voting instructions received for each of the points on the agenda. In case a valid proxy with voting instructions was already granted by the shareholder or the member, to a person, other than the person designated by the management body, then such proxy will be taken account, without the need for the proxyholder designated by the shareholder or the member, to be present.

The completed voting form and/or proxy may be forwarded by the shareholder or the member to the entity by any means, including by way e-mail and scan. In the case of listed companies, the completed voting form and/or proxy must reach the company at least 4 days prior to the meeting. Non-listed companies and associations may, but are not obliged to, impose a similar deadline.

The management body of a company or an association, may also require its shareholders or members to submit their questions in writing at least 4 days prior to the meeting.  In such a case the management body must provide the answers either (i) in writing at the latest on the day of the general meeting but prior to the vote; or (ii) orally during the meeting if the shareholders/members are allowed to follow the meeting live or in recorded form (webcam, conference call, etc.). Listed companies who opt to answer in writing, must publish the answers on their website. Non-listed companies and associations must reasonably ensure that all persons who have a right to participate in the general meeting are informed of the answers.

The Royal Decree No 4 also provides for the possibility to hold general meetings by conference call system even if such is not foreseen in the articles of association. In this case, the system used needs to meet the requirements set out in the Belgian Code of Companies and Associations.

In general, for resolutions of general meetings of shareholders or members which require a notarial deed, Royal Decree No. 4 provides that only the following person needs appear and sign before the notary: either, a member of the management board or any other person designated by it, in the case of a remote advance vote referred to above; or, the person designated by the management body, in the case of a vote by proxy referred to above.

POSTPONING A GENERAL MEETING

The management body of an entity may also decide to postpone any general meeting of shareholders or members, including the annual general meeting, regardless of whether such meeting has already been convened or not.

This option is particularly relevant for annual general meetings, which can be postponed for up to 10 weeks after the statutory deadline, giving the entities concerned additional time to approve and submit their financial statements.

The postponement must be announced to the shareholders or the members using the most adequate means available in light of the circumstances. Listed companies nevertheless have an obligation to publish the postponement through a press release and on their website.

The postponed meeting requires a new convening notice, in relation to which the usual convening formalities apply.

The option to postpone the general meeting of shareholders or, as the case may be, members, can, however, not be used for meetings (i) convened in the context of the alarm bell procedure where the net assets are or risk becoming negative or (ii) convened by the auditor or (iii) convened at the request of shareholders or members. In such cases, the management body can still hold the meeting without physical attendance and revert to the measures outlined above.

MEETINGS AND DECISIONS OF THE MANAGEMENT BODY

Royal Decree No. 4 allows the management body to take unanimous written decision as well as to hold meetings remotely using telephone-conferencing or video-conferencing facilities, even if such modalities are not provided for in, or are prohibited by, the articles of association.

Resolutions of a management body requiring a notarial deed, can be signed by one member of the management body or a designated representative, appearing in person in front of the notary.