The Virtual Shareholders' Meetings Act has come into force

VirtGesG enables companies and associations to hold their meetings online and thus in a more flexible, efficient, environmentally friendly and cost-effective way than physical meetings. For example, there is no need to spend time and money on travel, accommodation and organization, which also reduces the ecological footprint. In addition, this opens up the possibility for shareholders to participate from remote locations.

The law stipulates that companies wishing to hold virtual shareholders' meetings must ensure that shareholders can participate and vote via electronic means of communication. Virtual participation must be as close as possible to physical participation in order to ensure transparent and democratic decision-making. In this respect, the respective company law provisions on meetings must also be observed and applied accordingly.

The virtual holding of meetings remains possible even without a corresponding provision in the Articles of Association by means of an express or implied declaration of consent by all participants (exception: listed stock corporations, see III.). However, in order to prevent possible disputes and to ensure legal certainty, a corresponding written regulation is recommended in most cases and considered necessary in the event of disagreement between shareholders.

While the regulations for most types of company are kept quite general, for listed stock corporations there are sometimes very detailed regulations and obligations on the form and implementation of virtual/hybrid general meetings in order to take account of the regularly dispersed shareholder structure and to ensure appropriate protection.

In addition to the formal requirements, practical implementation challenges must also be taken into account, such as the technical equipment and competence of the participants or the protection of privacy and confidentiality of information.

Below is an overview of the new law in detail:

I. Scope of Application

The VirtGesG applies to corporations, cooperatives, associations, mutual insurance societies, small insurance societies and savings banks ("companies", Section 1(1)).

Depending on the form of the company, shareholders or members of the association are deemed to be "partners"; other persons entitled or obliged to participate are also covered ("participants").

I. (Virtual) Options for the Shareholders' Meeting

In addition to the physical shareholders' meetings provided for as before, three virtual types of shareholders' meetings are now standardized:

1. simple virtual meeting, §§ 2, 1 para. 2.

An acoustic and optical two-way connection in real time, which offers the possibility to speak, to vote and to object, must be guaranteed. Purely telephone/acoustic participation is not sufficient in this respect.

2. moderated virtual assembly, §§ 3, 1 para. 3

In contrast to a simple virtual meeting, the meeting has a moderator. If the floor is given, shareholders must be given the opportunity to speak. Otherwise, the regulations of the simple virtual meeting apply accordingly.

3 Hybrid meetings, §§ 4, 1 para. 4

Participants are granted the choice between physical and virtual participation in the meeting, whereby virtual participation can be simple or moderated (see above). Equal treatment of physical and virtual participation shall be ensured.

III. Special Features for General Meetings of Listed Stock Corporations

For the general meetings of listed stock corporations, the principles noted above apply, as well as the following additional obligations towards the participants:

At the latest on the 21st day before the meeting, the requirements for virtual participation must be communicated, if not already included in the notice of the meeting (§ 5 para. 2).
Enabling questions and motions for resolutions to be submitted electronically in the run-up to the meeting (Art. 5 par. 3).
Appointment of at least two independent proxies (Art. 5 par. 4).
In addition, it may be possible to broadcast the shareholders' meetings to the public and to cast shareholders' votes electronically prior to the shareholders' meeting.

If the Annual General Meeting is held virtually, shareholders who together hold at least 5% of the shares may request that the next Annual General Meeting be held in purely physical or hybrid form. This would mean that at least one hybrid General Meeting could be held every two years.

Articles of association on the virtual/hybrid holding of meetings can be limited to a maximum of 5 years. After that, an extension, or else a new regulation, can be considered.

IV. Other regulations

The following general principles apply to all types of meetings under the VirtGesG:

The organizational and technical requirements for participation shall be stated in advance in the notice of the meeting.
The Company shall verify the identity of the participants in case of doubt.
The Company is responsible for the use of technical means of communication insofar as these are attributable to its sphere of influence. In this respect, it is up to the participants themselves to ensure the necessary technical requirements and their functionality on their side.