The exceptional circumstances currently being experienced cannot fail to be considered by the corporate bodies of commercial companies, both the management and the bodies where the shareholders participate.
In Portugal, Decree-Law No. 10-A/2020 was published on March 13, establishing exceptional and temporary measures related to the present epidemiological situation.
With relevance to corporate law, article 18 of Decree-Law no. 10-A/2020 provides that “ general meetings of commercial companies, associations or cooperatives that must take place by legal or statutory imposition may be held until 30 June 2020“.
This measure, which at first sight seems to be limited exclusively to the annual general meetings of the legal entities in question (which, with some exceptions, must gather during the first three months of the year for presenting the annual accounts to the partners or shareholders), raises some questions regarding its scope, and it is important to highlight those questions that are more relevant and that are not directly settled by article 18 of Decree-Law no. 10-A/2020.
The first question refers to the general meetings already convened. The aforementioned article 18 provides a reasonable basis for those who are competent to do so (any manager, in private limited companies, or the chairman of the board of the general meeting, in joint stock companies) to revoke the notice or postpone the general meetings that have already been convened. Should this occur, communication to the shareholders must be made by the means used at the time the meeting was convened (registered letter, publication of the notice, e-mail with proof of reading or any other form required by the respective articles of association), as soon as possible.
Another issue (which the aforementioned article 18 does not clarify) is the legal framework for convening and holding general meetings which are not imposed by law, but by reason of the normal activity of corporate life which, notwithstanding the state of emergency declared, will continue to develop (e.g. appointment of corporate bodies, sale of the commercial establishment, increase or reduction of the share capital, dissolution of companies and other statutory amendments).
Regarding general meetings already convened, in view of the grounds justifying the postponement of general meetings imposed by law (the appearance of a pandemic outbreak that imposes social isolation), the same will apply to any other general meetings. The second issue concerns the general meetings not yet convened in which the shareholders intend to discuss urgent matters of the company and which should be resolved at a general meeting, such as those explained above.
At this point, it is important to highlight that the ways in which a general shareholders meeting can adopt resolutions are typified in the law, which means that the shareholders will not be able to resolve in any other way than those foreseen.
However, and regardless of the form of resolution to be adopted, the law allows general meetings of joint-stock liability companies to be held by telematic means, “unless otherwise provided in the articles of association” (paragraph b) of no. 6 of article 377 of the Portuguese Companies Code – “CSC”-, also applicable to private limited liability companies). Thus, this will be a possible alternative to adopt in this period – in which the intention is to avoid, as much as possible, face-to-face meetings -, although with the difficulties inherent to their implementation, especially in the case of companies that are publicly held. It should also be pointed out that holding general meetings by telematic means implies that the company “ensures the authenticity of declarations and the security of communications, by registering their content and the parties involved“.
Most recently, and in this respect, paragraph 1 of Article 5 of the recent Law no. 1-A/2020, published on 19.03.2020, has prioritized telematic means as a way of holding general meetings, establishing that “[t]he participation by telematic means, namely video or teleconferencing of members of collective bodies of public or private entities in the respective meetings, shall not hinder the regular functioning of the body, namely with regard to the quorum and resolutions; the form of participation shall however be recorded in the respective minutes“.
What remains unclear is what happens when the shareholders do not have the necessary means to hold this form of meeting.
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