Regulations of the Board of Directors on Electronic Means at the General Assembly
A Guide for Board Members
Since the beginning of the year, general assemblies can also be held as virtual or hybrid meetings with electronic means. With these new forms, the legislator is taking account of technical and social developments and promoting the participation and involvement of shareholders in general meetings. In order for general meetings to be conducted electronically, mandatory legal requirements must be met.
The following blog post describes the legal requirements for the use of electronic means and shows board members how to comply with them.
The legal basis for the use of electronic means
For a public limited company to be able to hold its general meeting virtually or hybridly by electronic means, it must at least be ensured that the identity of the participants is known, that the votes in the general assembly are transmitted directly, that each participant can make motions and take part in the discussion, and that the voting results cannot be distorted. For virtual general assemblies, further requirements apply, which we described in more detail in an earlier blog post. have described in more detail.
The legal basis for these duties is laid down in the Code of Obligations.
The individual requirements
The board of directors must ensure that the identity of the participants is established. This is the digital counterpart to the access control of the physical general meeting. This is to ensure that only holders of shareholder rights have access to the meeting and that votes and voting results are not falsified by unauthorised persons.
Furthermore, the votes of the participants must be transmitted immediately.In our opinion, the criterion of immediacy has two components: the first one is in terms of time, i.e. questions of the shareholders must be voiced during the discussion of the respective agenda item and immediately received and answered by the board of directors. It must be possible to make further comments immediately afterwards. The second component relates to the possibility for shareholders to express their votes directly without them being censored or filtered out by the board of directors. The aim of this requirement is to enable an active exchange of opinions among all participants, whether physically present or electronically connected, at all times.
Closely related to this is the third requirement: each participant must be able to submit motions and take part in the discussion. The purpose of this requirement is to enable the shareholders to form their opinion based on the votes of the BoD and the other shareholders. Furthermore, all participants should be able to actively participate in the AGM and submit motions.
The fourth requirement is that the voting result cannot be distorted.This is intended to prevent the same share votes from being recorded more than once, either consciously or unconsciously, whether by the same person or, for example, by the interaction of the shareholder and the proxy. The goal pursued by this is obvious.
In other words, the board of directors must refrain from using insecure electronic means that are not suitable for an interactive exchange of opinions and correct voting results. The board of directors must verify compliance with these requirements before holding a general meeting by electronic means.
Where should the use of electronic means be regulated?
In order to meet the requirements of bindingness, transparency and traceability, it is advisable to record these regulations in a formal internal company decree.
In principle, it is possible for the regulations on the use of electronic means to be laid down in the articles of association of the company. However, the fact that the articles of association offer little room for too fine-meshed rules and require a resolution of the general assembly, public certification and registration in the commercial register for each adjustment speaks against this.
More flexibility is offered by regulations of the board of directors, which in principle can be adapted by the board itself at any time, do not have to be notarised and accordingly do not have to be registered with the commercial register, and furthermore allow for more depth of regulation. Accordingly, the legal principle also provides that the board of directors regulates and is responsible for the use of electronic means.
Where board members can find support
Konsento operates software solutions for general meetings and board meetings. Pre-formulated agenda items for board meetings support the board in preparing general assemblies, including virtual and hybrid ones, of course. A specific agenda item is dedicated to the adoption of board regulations for the conduct of virtual or hybrid general meetings. A template of such regulations, written by Prof. Dr. iur. Roland Müller and Dr. iur. Felix Horber and published for the first time in the Schweizerische Juristenzeitung SJZ 1/23, is available to Konsento's premium customers.
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