Covid-19 and companies

30/03/20
Covid-19 and companies

Deadlines set for the approval of accounts and conditions under which shareholders meetings board meetings may be held

  Out of the 26 orders published on March 25, 2020 pursuant to Emergency Act no. 2020-290 of March 23, 2020 to deal with the Covid-19 epidemic, two of them (no. 2020-318 and no. 2020-321) concern the preparation, approval and closing of companies’ financial statements, as well as the conditions under which the shareholders and the collegial governing bodies of such entities may meet and deliberate. The main measures provided for in these orders are as follows:
  1. Preparation and approval of accounts
Companies (and more generally legal entities, as well as private law entities without legal personality) that close their accounts between September 30, 2020 and the first month following the end of the state of health emergency, are entitled to a three-month extension to have their accounts approved. However, this deferral shall not apply to entities with an auditor, if the auditor has issued its report before 12 March 2020. Under this condition, companies with a financial year ending on December 31, 2020 will therefore be allowed to have their accounts approved until September 30, 2020 without having to request further authorisation.  
  1. Shareholders Meetings and Board meetings
Scope of application Order No. 2020-321 (or "the Order") is applicable to all civil and commercial companies and to group of security holders. It is also directed at a wide range of entities concerned by the holding of general meetings of their members (EIGs, mutual and insurance companies, non-profit organisations, etc.). Holding of general meetings The main contribution of the Order consists in the possibility of holding the general meeting in camera, i.e. without the physical presence of the members and any other person entitled to attend (e.g. auditor, member of the social and economic committee, bailiff). Alternatively, the shareholders, and the other persons mentioned above, may participate in the meeting by means of a telephone or audiovisual conference call. In this case, the means used must imperatively allow:
  • to identify the participants;
  • to transmit at least the participants' voices; and
  • to ensure continuous and simultaneous retransmission of the deliberations.
The technical arrangements specifying these conditions, should be set out in an implementing decree to be published shortly. In any event, members of the general meetings who participate by one of these means are assumed to be present for the calculation of the quorum and majority. In the case of a general meeting being held in camera, this procedure de facto removes, exceptionally and temporarily, the right of shareholders to raise oral questions or to amend draft resolutions during the meeting. However, the measures introduced by the Order have no effect on other rights, such as (i) the right to vote, (ii) the right to address written questions, and (iii) the right to propose the inclusion of specific points or draft resolutions on the agenda. The Order does not contain any specific provision on voting; however, the usual means provided for in the legislation remain available. Accordingly, in practice, shareholders may vote by proxy given to the chairman of the meeting, or by mail. In the case of a general meeting held by telephone or audiovisual conference call, technical solutions for remote voting via a platform are also possible.   Management bodies Collegial administrative bodies, supervisory or management bodies (board of directors, supervisory board, management board, "strategic" boards set up in SASs, etc.) may validly meet by telephone or audiovisual conference (under the same technical constraints as the general meetings), or by written consultation. The provision granted by this Order is to allow these alternative means of meeting even if the articles of association do not expressly provide for it. These provisions apply regardless of the purpose of the decision (notably to approve the accounts, contrary to what is normally provided for in sociétés anonymes).  
  1. Application of the order over time
These provisions are retroactively applicable to general meetings and board meetings held as of March 12, 2020 and until July 31, 2020, unless subsequently extended. This retroactive application is likely to be questionable for decisions already taken, or in cases where notices of meetings have already been decided or sent out before March 25, 2020, even if the Order provides for transitional measures in this case. It appears from the terms of this Order that if the lockdown is removed between the date of the call and the date of the shareholders' meeting, the exceptional provisions set out above relating to the calling and holding of shareholders' meetings may apply until July 31, 2020 (or any other later date that may be decided by decree).       [interne id="43490"] [interne id="43788"] [interne id="103235"]
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