Virtual Shareholder Meetings Act (Virtuelle Gesellschafterversammlungen-Gesetz – VirtGesG): Creation of a permanent legal basis for virtual and hybrid meetings

With the Virtual Shareholder Meetings Act (VirtGesG) passed by the National Council on 7 July 2023, the option of holding shareholders’ meetings without the physical presence of participants, which had been introduced on a temporary basis in times of the pandemic, has now been implemented in the law on a permanent basis. Therefore, virtual and/or hybrid general meetings will be possible in the future – even without the consent of each shareholder – if this has been provided for in the articles of association (bylaws / statutes).

The temporary exception provision of sec. 1 Austrian COVID-19 Corporate Law Act (COVID-19-GesG) facilitating “virtual meetings” expired on 30 June 2023, so that holding general meetings by video conference would no longer be permissible. The VirtGesG, which entered into force on 14 July 2023, now serves as a general legal basis for virtual or hybrid shareholder meetings. Unlike the COVID-19-GesG, the new regulation no longer comprises board meetings (board of directors/supervisory board meetings).

Key elements of the VirtGesG

It covers general meetings (“GM”) of corporations, cooperative societies, associations and savings banks.

The articles of association can provide for various alternatives of holding a general meeting, i.e., as a:

• attendance meeting (as hitherto; also applies if the articles of association do not contain any provisions at all),
• virtual meeting i.e., via an acoustic and visual two-way connection in real time (video conference), or
• hybrid meeting, i.e., as attendance meeting with the option to participate virtually,

or

• the body organising the meeting may decide on a case-by-case basis the form in which the general meeting shall be held.

In addition, the articles of association can specify whether the virtual or hybrid meeting is to be held as a “simple” or a “moderated” general meeting. Whereas in the standard case of a simple virtual meeting there is a two-way connection, i.e. all participants can speak at any time, in a moderated virtual GM, the meeting is primarily broadcasted, but with the possibility of written communication at any time (e.g. by chat, e-mail or in a separate portal) and, at the request of a participant or if the chairperson of the meeting gives a participant the floor, also oral contributions/questions. This is to allow for debates. In hybrid meetings, virtual and real participants must be treated equally.

The software to be used and other technical requirements may be specified in the articles of association or (at the latest) determined and communicated by the chairman at the time of the invitation. However, virtual participation must be possible easily and free of charge, without having to download any specific software.

In other respects, the normal statutory provisions for inviting and procedural modalities apply.

Special provisions for publicly listed stock corporations (Aktiengesellschaften)

The details of the organisational and technical participation requirements must be provided and available on the website at least 21 days prior to the general meeting. In addition, an electronic communication channel shall be made available through which shareholders can submit questions and motions for resolutions to the company in advance. Furthermore, the articles of association may specify that voting by electronic means before the meeting shall be enabled (either in any case or only if the board of directors so determines).

In order to make it easier to exercise shareholders’ rights, the company shall – at its expense – appoint two independent proxies, whom a shareholder may instruct to vote, propose resolutions or object on his/her behalf.

After a virtual general meeting, by the end of the financial year, minorities with an aggregate share quota of at least 5% may request that the next general meeting be held again as attendance meeting. As a result, shareholders can cause the holding of an attendance meeting at least every other year.

It is also important to point out that the provisions in the articles of association allowing for virtual and/or hybrid meetings must be limited to a maximum of 5 years. However, the resolution on the extension of the period of validity may be passed by way of a virtual or hybrid general meeting.

In practice

The legal admission to hold virtual shareholder meetings (or to participate in such meetings) is relevant for corporations with a multitude of shareholders (members), where a consensus regarding the organisational modalities of the meeting is not ensured. In such cases, it would therefore make sense to include corresponding provisions in the articles of association. It should be noted that – as in the past – any meeting (including board meetings) can be held virtually or in hybrid mode without an explicit provision in the articles of association in cases where all participants agree (including by implied consent, e.g. through participation).

Do you have any questions or need advice on the topics above? We are happy to assist you with implementing the new options in the articles of association.

Links

Virtual Shareholder Meetings Act (Virtuelle Gesellschafterversammlungen-Gesetz – VirtGesG)