Digitalisation is increasingly permeating corporate law. For example, the Covid-19 pandemic has fueled the need to be able to hold shareholders' meetings by remote means of communication, in particular virtually by videoconference, even if not all shareholders agree to such a form of meeting in the specific case. This applies above all to the GmbH. Particularly in GmbHs where some shareholders are domiciled abroad, this offers the opportunity to pass resolutions more quickly and with less time and effort.
On 01.08.2022, the legislator implemented the Digitalisation Directive in this context. Time for a look at the effects in practice and for an assessment of the newly opened possibilities.
What is the legal situation
Until now, shareholders' meetings of a GmbH could only be held as face-to-face meetings according to the legal regulation. The law only provided for the possibility of passing shareholders' resolutions outside of shareholders' meetings if all shareholders agreed in text form to the provision to be made or to the votes being cast in writing. With the Covid-19 pandemic, the reality of life has overridden these legal requirements. In business life, video conferencing has established itself as a common forum for meetings and gatherings. The legislator has reacted and now generally opens up the possibility of holding shareholders' meetings in a GmbH also by telephone or by means of video communication if all shareholders agree to this in text form.
Virtual or hybrid shareholder meetings on the rise
It is true that the virtual shareholders' meeting remains the exception in the case of a GmbH. However, it could be made the rule by the shareholders. However, it seems unlikely that this will happen in general. This is because the holding of a virtual shareholders' meeting entails some risks compared to a face-to-face meeting, especially if there are differences of opinion between shareholders that could lead to a contentious dispute. Particularly in the case of uncomplicated meetings, however, GmbH shareholders nowadays evidently increasingly rely on purely virtual participation or on hybrid forms of meeting, i.e. on a presence meeting in which some shareholders, however, participate virtually.
Meetings with items on the agenda where there is a considerable need for discussion or where considerable differences of opinion or even conflicts between the shareholders are expected, or where new managing directors and executive employees are introduced, continue to be held predominantly as attendance meetings. From the point of view of the shareholders, a general meeting seems to be better suited to the scope of the issues to be discussed or decided upon. Experience shows that in such cases it is easier to achieve good results with a presence meeting if the shareholders sit face to face. This applies to the resolution of conflicts, but also to the provable observance of formalities, which may be the basis and framework for a subsequent contentious dispute between the shareholders. The more controversial a shareholders' meeting is likely to be, the more sensible it appears to hold the meeting as a face-to-face event, because this is likely to be more purposeful for the participants and then to save time in the long term.
Risks of a virtual general meeting
If the shareholders decide to hold a virtual or hybrid shareholders' meeting, this is associated with minor and major risks. In our view, the following three risks are particularly serious:
• Consent of all shareholders
The holding of a shareholders' meeting in a purely virtual or hybrid form requires the consent of all shareholders for this specific shareholders' meeting. The consent of the shareholders must refer to the specific agenda items to be dealt with at the shareholders' meeting and must be in text form (e-mail, SMS, What's App). If such a declaration of consent is missing and if there is no provision in the company's articles of association that makes such specific consent dispensable, all resolutions passed at this virtual general meeting are incurably void. Before holding a virtual or hybrid shareholders' meeting, the shareholders must therefore always ensure that such consent of all shareholders exists or is dispensable due to provisions in the articles of association. Of course, this applies in particular to those shareholders who wish to pass effective resolutions at the shareholders' meeting.
• Confidentiality and secrecy
In principle, only shareholders of the company may participate in a shareholders' meeting. The participation of third parties generally requires the consent of the shareholders' meeting and is above all visible to all participants. If a shareholders' meeting takes place virtually, this confidentiality of the meeting and of the respective contributions and resolutions is no longer as easy to guarantee and verify as at a presence meeting. This is because, when telecommunication means are used, the shareholders can practically no longer check whether persons are secretly following the proceedings at the meeting who are not authorised to do so, or whether unauthorised visual or audio recordings are also made of the meeting. Shareholders to whom confidentiality is particularly important should be aware of this when they agree to a virtual shareholders' meeting.
• Technical disruptions
Technical malfunctions occur every now and then in virtual general meetings. As a rule, the shareholder affected by this bears the disadvantages resulting from this alone. Unless it can be proven that the company is responsible for this, resolutions adopted at the meeting will probably not be contestable as a result, in accordance with the handling in company law. Technical disruptions can also promote disputes between shareholders as to who made which legally relevant statements at the meeting.
Amendments to the articles of association - facilitating or complicating the virtual shareholders' meeting
The shareholders of a GmbH are free to include regulations on the virtual conduct of shareholders' meetings in their articles of association and thus to regulate this complex in deviation from the statutory provision. In doing so, they can decide in favour of the two extreme positions - i.e. to hold only virtual meetings or, in deviation from the statutory facilitation, to stipulate the presence meeting as the only possibility - or the shareholders can choose a middle course and, for example, facilitate the holding of virtual shareholders' meetings. In our view, the two extreme positions are not advisable. However, facilitating the holding of virtual shareholders' meetings, especially in the hybrid partial presence form, has already proven its worth many times.
Many facilitations for holding a virtual shareholders' meeting are conceivable. Some of these have proven particularly effective in practice. These include in particular (i) a waiver of the requirement for the consent of all shareholders for the holding of virtual/hybrid general meetings and (ii) further facilitations for the holding of virtual/hybrid general meetings in urgent cases.
