Shareholder representatives fear a continuing curtailment of shareholder rights as a result of the extension of the special regulations for online general meetings. “The experiences from the 2021 general meeting season, which was largely a purely virtual one, have shown that this type of shareholder meeting has not proven itself,” said the general manager of the German Protection Association for Securities Ownership (DSW), Marc Tüngler, of the dpa in Frankfurt am Main.
With a few exceptions, no exchange with the board of directors and supervisory board of their company was made possible for shareholders during the meeting. “The current efforts by parts of the industry to anchor the virtual AGM as a fixed option in the German Stock Corporation Act are all the more critical,” emphasized Tüngler.
Typically, a company’s board of directors, supervisory board, and owners need to physically meet to pass resolutions. This is what the German Stock Corporation Act prescribes. Because thousands of people gather at general meetings – in short, AGM – in normal times, due to the pandemic in 2020, German lawmakers allowed for the first time to hold general meetings online without prior changes to the articles of association. Numerous companies made use of this exemption.
Important decision-making body
Because the corona pandemic has not yet ended, companies are allowed to hold their shareholder meetings in a purely virtual manner until August 31, 2022. “Especially for large stock corporations, which still have the option of holding virtual general meetings, planning security for holding general meetings is important,” said the Federal Ministry of Justice.
In addition to the board of directors and the supervisory board, the general meeting is the most important decision-making body of a stock corporation. Once a year, shareholders usually have the opportunity to personally express their views on the management of their company. In addition, the shareholders make important decisions: The general meeting votes, for example, on the distribution of dividends, possible capital increases or elections to the supervisory board.
In the opinion of the Deutsches Aktieninstitut (DAI), the virtual general meeting has proven its worth. The advantage of such events is obvious: “The time and cost of participation are much lower than at a meeting in person. It enables shareholders all over the world to participate without having to travel halfway around the globe.” The format thus also takes into account the fact that many German companies have a large proportion of shareholders from abroad.
Hybrid formats
The Aktieninstitut already called for a modernization of the general meeting in September: “It is not just a question of anchoring the virtual general meeting as an equivalent alternative to the general meeting in person in the Stock Corporation Act. Rather, it is necessary to fundamentally reform the general meeting in order to make it up to date.”
The BVI fund association considers hybrid formats to be a good solution. BVI General Manager Thomas Richter warned at the same time: “What we will need again at annual general meetings in the future, however, is a real dialogue between shareholders and company management.”
(anw)