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20 May 2020

Covid-19

E-meetings of company bodies

The spread of COVID-19 and the ongoing preventative measures taken by governments has severely frozen the worldwide economy and numerous business sectors. Quarantine management and the restrictions on freedom of travel between continents or countries has led to the isolation of a large number of people. This situation means there is a significant risk of paralyzing the activities of company bodies. The restriction on gatherings of more than 2 people also means that for most companies there has been no possibility to convene a shareholders' meeting. Originally, the Polish Code of Commercial Companies did not provide for holding management board meetings with the use of new technologies, and allowed for such use in the case of supervisory boards to a limited extent only.. The law of 29 March on specific solutions related to the prevention and eradication of COVID-19 responds to this issue by introducing the possibility of holding meetings of shareholders, management boards and supervisory boards of limited liability companies and joint-stock companies using new technologies, i.e. in particular teleconferencing or video conferencing. It should be noted that this change of law will apply not only for the duration of the COVID-19 epidemic. The above-mentioned regulation also applies to European companies, having regard to Article 53 of Regulation No 2157/2001, which as a rule states that the organization and conduct of meetings together with voting procedures shall be governed by the law applicable to joint-stock companies in the Member State in which the SE's registered office is situated.

The basic question to be asked in connection with the introduction of e-meetings for shareholders is how to ensure the technical conditions for holding such a meeting. The first problem that catches the eye relates to situations in which the company law or the articles of association provide for a secret voting on resolutions. In this case, the chosen method of electronic communication must have functionality that ensures the possibility of conducting secret voting. Ensuring the possibility of voting with full anonymity may require the implementation of appropriate software in the company, which may give the impression of being economically disadvantageous. Also the security of this communication must be ensured (e.g. against unauthorized access or interception of data transmitted via a computer system). To summarize the analysis of the provisions on remote shareholders' meetings, it is clear that their application may involve practical difficulties, which significantly hampers the benefits of holding on-line meetings. This serious issue will require further legislative work.