Romania: Temporary rules on holding general meetings under social distancing requirements
Due to the pandemic caused by the spread of SARS-CoV-2 and the state of emergency declared because of this pandemic, several government ordinances gradually imposing measures to limit the movement of persons, to require social distancing and to restrict the conditions under which meetings may take place have been issued. In this context, companies’ obligation to organize and hold general meetings cannot be fulfilled in the usual manner.
For this reason, the Government has adopted Emergency Ordinance No. 62/2020 (hereinafter “GEO 62/2020”) which entered into force on 8 May 2020. The purpose of the new law is to facilitate the activity of companies’ shareholders so that their obligations under law and the companies’ articles of association related to holding general meetings can be observed.
- According to Companies Law No. 31/1990, republished, as subsequently amended and supplemented (hereinafter “Companies Law”), companies have the obligation to convene an ordinary general meeting to decide on some essential aspects for their business such as approving the annual financial statements or establishing the income and expenditure budget by five months after the end of their financial year. Under GEO 62/2020, this deadline has been extended to 31 July 2020.
- During the state of emergency, general meetings by correspondence, otherwise only permissible if allowed in express provisions of the company’s articles of association, may be convened either by publication in the Official Gazette of Romania, 4th Part, in a local newspaper with a wide circulation, or by any means of remote communication ensuring the transmission of the text, on the condition that the addresses of the participants have been provided in writing.
Thus, general meetings are now permitted to take place by means of correspondence or by direct remote electronic communication during the state of emergency even if the articles of association do not provide for this or expressly prohibit it.
The corporate body that has the power to convene the general meeting indicates in the convening notice the date and time of the meeting, the forms of participation, how it is to be conducted and how the participants are to access it, the place where powers of attorney are to be sent and the voting methods.
The same body decides the communication method or combination of methods to be used for convening (registered letter, courier, letter sent electronically, having the extended electronic signature attached or logically associated thereto, fax, etc.).
The convening notice, the information and the documents concerning the items on the agenda will be published on the company's website, if any, and, where appropriate, on a website intended for certain types of companies and will also be sent by e-mail if the addresses of the shareholders are known. If the electronic transmission of the documents is not possible, copies thereof will be sent by mail or courier at the request of the shareholders; the same procedure will be used for updated documents each time the agenda changes before the meeting.
If a secret ballot is required, the convening corporate body will ensure that the voting is by a means that allows disclosure only to those persons in charge of counting and validating the votes. The votes and the proxies’ (original) powers of attorney must be communicated in the manner indicated in the convening notice and be received by the date of the meeting.
General meetings held exclusively by correspondence eliminate the legal obligation of the managers, members of the board of directors or, as the case may be, of the members of the management board and supervisory board, and/or directors to participate in the meeting.
- General meetings may also be held by direct remote electronic communication such as teleconference or videoconference, subject to secret ballot, if required, and the right to postal voting.
The means of remote electronic communication must meet a number of technical requirements, be compatible with the most common technologies and current operating systems and ensure the identification of participants and their actual participation in the meeting, continuous two-way and real-time transmission and the recording and archiving of the general meeting. The electronic means must also allow votes to be cast during the general meeting, recorded and subsequently verified as to the manner in which the vote has been taken.
The competent corporate bodies will draw up and sign by hand or by extended electronic signature a list of the resolutions passed at the general meeting containing all the approved items on the agenda.
- Regardless of the way of organizing the meeting at a distance, i.e. by correspondence or electronic means, the minutes of the meeting are to be drawn up and include aspects such as: a) fulfilment of the convening formalities; b) the decision of the competent corporate body to organize the meeting by electronic means / exclusively by postal vote; c) fulfilment of the quorum requirements, the total number of communicated votes, the total number of shares and voting rights for which the vote has been validly cast; d) the adopted resolutions and the number of votes cast for each voting option corresponding to each voted item on the agenda and, as the case may be, the means of voting for each item, and e) the shareholders who have voted against some resolutions and have requested that their opposition be mentioned in the minutes. In the case of general meetings in electronic form, the debates during these meetings are also to be recorded.
All of these provisions are also applicable to general meetings convened before 8 May 2020 for a date subsequent to the declaration of the state of emergency, in which case the convening corporate body will inform the participants of the new way of holding the meeting and voting at least five days before the date set for the meeting.
If good, exceptional reasons related to the effects of the SARS-CoV-2 pandemic justify the rescheduling of the meeting, its date, time or place may be changed, without the need for new convening formalities and without mentioning the grounds for cancelling the convening notice. The convening body will inform the shareholders about the changes at least five days before the date originally set. However, the reference date remains the same. The ballots and the powers of attorney that have been issued remain valid unless new ballots and/or powers of attorney are issued.
If the general meeting convened prior to 8 May 2020 cannot be held by means of remote communication, the competent corporate body may revoke the convocation of the meeting.
In the case of general meetings held during the state of emergency by the means provided by GEO 62/2020 but before its entry into force, the resolutions thus adopted cannot be cancelled for non-compliance with the usual conditions if all shareholders have agreed on the means of holding the meeting (exercising the right to vote is presumed to constitute such an agreement).
Also, participation in the meetings of the companies’ governing bodies is permissible by remote communication, regardless of the subject matter of the resolution, during the state of emergency and in the first 30 days thereafter. In this case as well, the means of direct remote communication must meet the technical conditions for the identification of participants, their actual participation and the constant retransmission of deliberations.
The provisions of GEO 62/2020 are also applicable to general meetings convened during the state of emergency but held after it ends, as well as to general meetings convened and held during the first two months after the state of emergency ends, including to bondholders' meetings. The act does not apply, however, to companies within the scope of Law no. 24/2017 on Issuers of Financial Instruments and Market Operations.
Thus, GEO 62/2020 allows companies to continue their decision-making activity, in compliance with the restrictions on social distancing, during the state of emergency and even after it ends, its provisions being duly supplemented by the amended and supplemented provisions of the Companies Law.
Practice group: Corporate/Mergers & Acquisitions