What are AGMs with written voting and for which stock corporations are they suitable?
Shareholder approval
Current company law stipulates that resolutions of the AGM can be passed in writing on paper or electronically. In contrast to the other types of AGM, attendance in person is not possible at written general meetings.
The written resolution requires that no shareholder requests an oral discussion. Approval to this form of AGM can either be given tacitly by the shareholder participating in the resolution by voting in favour, against or abstaining. Furthermore, express consent to the circular resolution is also possible without active participation in the resolution.
Ballot and circular resolution
In the case of written AGM resolutions on paper or electronically, a distinction can be made between the so-called ballot vote and the circular resolution.
The ballot vote is a written majority resolution in which not all shareholders are required to participate. However, the general rules for convening general meetings apply, i.e. the right to submit motions and a minimum 20-day period for voting must be observed. Each shareholder receives the voting documents together with the motions, which they can answer with "yes", "no" or "abstain". In accordance with the paper or electronic forms of resolution provided for by law, the voting options can be printed on a written form or displayed in an electronic voting tool. Depending on whether the vote is conducted on paper or by electronic means, the votes received must be counted manually or electronically and the result recorded in corresponding minutes.
A circular resolution, on the other hand, is only passed with the express vote of all shareholders. This is a special form of universal general meeting. Consequently, the convening formalities do not have to be observed.
In the case of a circular resolution, only pre-prepared minutes with the anticipated result are sent for signature. This therefore assumes that the unanimous acceptance of the motion is already known in advance. The vote can be cast in writing, i.e. with a handwritten signature and return or forwarding of the proposed resolution by postal mail, as well as in electronic form, for example by email or in a PDF file on a central filing system.
In the case of circular resolutions on paper, the same document is usually not actually circulated for reasons of practicality, so that each shareholder signs their copy of the minutes and sends it back to the company, where the various copies are collated. This problem does not arise with electronic circular resolutions, as the electronic signatures can be made in a single file.
No statutory basis necessary
In contrast to the virtual general meeting, a statutory basis for passing resolutions in writing at the general meeting is not required, but is recommended: On closer inspection, numerous follow-up questions arise during the process to which the law provides no or no clear answer, in particular regarding the delivery of motions and information to the shareholders or the deadlines to be observed for responding to the motions.
Documents for registration in the commercial register
The minutes of the resolution are submitted to the Commercial Register Office as evidence of the resolution, which are signed as usual by the secretary and the chairman of the Annual General Meeting. The "written votes" of the shareholders or a circular resolution signed by all shareholders do not have to be submitted to the Commercial Register Office, but are examined by the notary as part of the notarisation process. The proper composition of the Annual General Meeting, the shareholders' approval of the type of resolution and the resolution passed must be confirmed by the Chairman of the Board of Directors as part of the notarisation. However, they are not checked by the Commercial Register Office.
Conclusion
General meetings with written resolutions are not suitable for companies with a large number of shareholders, as each individual shareholder has the right to veto this form of implementation and request oral deliberation instead. On the other hand, this pragmatic form of general meeting is ideal for smaller public limited companies and in particular for resolutions that are easy to anticipate and must be well documented for formal reasons. For the Board of Directors and shareholders, written general meetings have the advantage that votes can be cast at different times and no proxy is required. This is a great practical benefit, particularly in the case of capital increases by early stage start-ups. Written resolutions by electronic means are more efficient than paper resolutions because no voting forms need to be sent out and counted manually (ballot vote) and no minutes need to be sent out and signed by hand (circular resolution). Konsento digitizes the legal tasks of corporate action and offers intuitive, time-saving and legally compliant solutions for general meetings using electronic means. Contact us for a free demo or register hereto test the premium version for 30 days free of charge and without obligation.
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