Telematic General Assemblies: Return to the Future?

Published: 17 Nov 2020

The participation of the partners is substantially less costly for them than that carried out in traditional terms, being just two or three clicks away.

The pandemic we face came to impose a “social distance” and general confinement, the impact of which is felt in all areas of our lives. Also in the “corporate governance” the pandemic has direct and pressing repercussions, among many others, in the functioning of the general assemblies that at this time of the year occur in the overwhelming majority of Portuguese societies.

Between recommendations and impositions of living with “social distance” and confined as far as possible, it was clear to everyone that the holding of annual general meetings could not take place in the traditional way. As a way of overcoming these difficulties and allowing the life of societies not to stop, we have witnessed the holding of several general meetings exclusively through telematic means.

This format of general meetings, despite having been provided for in our legal system since 2006, has practically no practical application between us until now.

This “new practice” forced the agents to reinvent rules and procedures, forms of interaction and discussion in the corporate context. As with all changes in life, there are risks to be considered, opportunities that are generated and fears that are created.

Some of the risks the law seeks to mitigate, but others there are that only the agents' practice, experience and diligence will resolve. For example, at the legal level, holding general meetings through telematic means presupposes that the company ensures the authenticity of the statements, the security of communications and proceeds with the registration of the content and of the stakeholders.

In addition to ensuring compliance with these requirements, it is also essential that the companies themselves implement appropriate mechanisms for the participation of shareholders in this type of meeting; the exercise of their right to vote in that context; and to guarantee the full exercise of the “right to information” by the partners.

Far beyond the strict legal perspective, it is essential that in each company there is a set of rules and procedures that generate trust to its partners. Only by mitigating risks can the opportunities generated by general meetings "at a distance", which are multiple, can be enhanced.

Right from the start, the advantage of allowing corporate life to be more agile and not stop even in times of pandemic, which is fundamental because there are various commitments of enormous relevance to the life of companies that depend on deliberations in the time of the partners. For example, the approval of the annual accounts by March 31 is essential for many companies, under penalty of non-compliance with financing contracts or other similar contracts (which the exceptional moratorium foreseen for this year does not resolve).

Telematic general assemblies also have the potential to enhance the participation of partners and thus allow a desirable increase in their involvement in the life of companies. In fact, the participation of the partners in an assembly carried out by telematic means is substantially less costly for them than that held in traditional terms, being just two or three clicks away.

However, one should not ignore the fears that are created with the use of telematic means. The immateriality underlying the telematic means always causes a dose of discomfort in those involved, as we are tempted to “see and believe” like São Tomé.

Likewise, the way in which assemblies operate without personal and direct interaction, in which someone can put us out of the “room” without anything we can do (at least immediately) and / or give or take the floor without us being able to do so. questioning directly, are also themes that generate natural doubts and fears.

In this context, the figure of the “Chairman of the Board of the General Meeting” can be a critical factor in the comfort and safety of those involved. It will be in the credibility, firmness, independence, knowledge and fairness of this central figure of the general assemblies that the partners will be able to support their fears, since this must guarantee to all that the meetings are held regularly and in full respect for the rights of the members, in particular, participation, voting and information rights.

Having to be aware of the risks, opportunities and fears that these solutions represent for the lives of companies and their partners, it will be interesting to monitor whether this return to a “future” that has long been envisioned by the legislator and the Corporate Governance will take root in our corporate practice.

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José Costa Pinto

Firm: Costa Pinto Advogados
Country: Portugal

Practice Area: Corporate

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