Resolutions in Absentia – A Useful Convenience in the Management of Limited Liability Companies and Joint-Stock Companies
In the conditions of a global pandemic and strengthened measures for social distancing, the issue of the resolutions in absentia in the management of companies becomes relevant.
- The Commerce Act (“CA”) provides, first, the possibility for stockholders in Limited Liability Companies (“OODs”) to adopt such resolutions. Pursuant to Art. 139, para. 2 CA, the resolutions of the general meeting may be adopted in absentia if all stockholders have stated in writing their consent to the resolution. A resolution in absentia may be adopted at any time and on any matter within the competence of the general meeting of stockholders, and not only in the case of a “serious, expeditious and urgent matter”, as the Supreme Court of Cassation (“SCC”) groundlessly holds. The SCC’s understanding that such resolution can be adopted if the articles of association of an OOD contain a specially arranged procedure for this, cannot be supported as well.
An option for a resolution in absentia is provided by the law; secondly, for the resolutions of the boards of Joint-Stock Companies (“ADs”), in Art. 238, para. 3 CA, the statutes may provide for the board to adopt resolutions in absentia, if all members have stated their written consent to the resolution.
Resolutions in absentia are adopted without having the members of the relevant body convene and hold a physical meeting; the rules of quorum and majority, which are mandatory at the physical meeting, do not apply to them. Various cases can qualify as resolutions in absentia. First of all, it is possible to have all stockholders, resp. board members, to be present at the same place at the same time and to adopt a resolution, if everyone agrees with it, even though the procedure for convening a physical meeting has not been carried out in advance. Secondly, it is possible for them to be physically located at different places, but to have simultaneous contact among one another through an audio or video connection, and the resolution so adopted to be objectified in a written document, which is afterwards signed by them. Finally, the stockholders, resp. the board members, may not have simultaneous virtual contact among one another (via audio or video connection), and each of them may express his/her consent for the resolution in writing, in a separate document, or the written resolution may be signed by them consecutively. In all these cases, the resolution in absentia is considered adopted on the date on which it is signed by all stockholders, resp. board members.
In order to adopt a resolution in absentia, the consent of all stockholders, resp. board members, is required for the resolution on the merits, and not only for using this method for its adoption. The requirement for unanimity cannot be replaced in the articles of association, the statutes or the rules of operation of the boards under Art. 241, para. 5 CA, Art. 242, para. 3 CA and Art. 244, para. 2 CA, by a requirement for a certain majority, for example the majority applicable when adopting the relevant resolution at a physical meeting, because the requirement for the consent of all stockholders, resp. board members, is intended to compensate for the lack of opportunity for a joint simultaneous discussion of the proposed resolutions, which opportunity is available at physical meetings. According to the recent SCC case law, the lack of unanimity under Art. 139, para. 2 CA does not invalidate the resolution in absentia as an absent (non-adopted) resolution; in violation of the special procedure, provided in Art. 139, para. 2 CA, that relates to the required majority and the method of voting in case of resolutions in absentia, they are annullable under the procedure of a legal action under Art. 74 CA.
- The CA does not provide the possibility for the shareholders in an AD to adopt resolutions in absentia. These are subject to the general rule under Art. 231, para. 1 CA that the general meeting of the shareholders cannot adopt resolutions concerning matters that were not announced in the invitation for the general meeting pursuant to Art. 223 CA, or included in the agenda at the initiative of shareholders pursuant to Art. 223a CA. However, Art. 231, para. 1 CA provides a significant exception to this rule – a resolution may be adopted on matters that have not been announced in accordance with the provisions of Art. 223 and Art. 223a CA, if all shareholders are present or represented at the meeting, and no one objects to discussing the issues raised. The statutes of an AD may permit adoption of a resolution in absentia with the consent of all shareholders about the resolution on the merits because such regulations would not prejudice their interests – rather, they would provide them with an additional quick opportunity to adopt a resolution in the presence of unanimity of the shareholders without following the procedure for convening a physical meeting of the general meeting of the shareholders.
The public company may provide in its articles of association and/or in the invitation to convene the general meeting of the shareholders the option for the general meeting of the company to be held using electronic means (real-time broadcast of the general meeting; real-time two-way messages, allowing shareholders remote participation in the discussions and the decision-making process; procedure to vote before or during the general meeting, without the need of authorising a person to attend the general meeting personally) (Art. 115, para. 9 of the Public Offering of Securities Act). The shareholders’ participation in the general meeting of the public company, using electronic means, shall be taken into account when determining the quorum, and the voting shall be registered in the minutes of the general meeting. The general meeting minutes shall have an attached list of all persons who have exercised their general meeting voting right by electronic means, as well as the number of shares held. The aforementioned list shall be certified by the general meeting Chairperson and Secretary (Art. 115, para. 10 of the Public Offering of Securities Act).
- Signing of the resolutions in absentia with electronic signature. The legal effect of the qualified electronic signature, within the meaning of Art. 3, item 12 of Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC, is equivalent to that of the handwritten signature (Art. 25, item 2 of the same Regulation). If the resolution in absentia is signed with such electronic signature, this is equivalent to signing it with a handwritten signature. It does not matter in which EU Member State the qualified electronic signature is issued (Art. 25, item 3 of the same Regulation) and the articles of association, the statutes or the rules for operation of the boards under Art. 241, para. 5 CA, Art. 242, para. 3 CA and Art. 244, para. 2 CA, cannot include restrictions in this respect, or stipulate what exactly qualified electronic signature must be used to sign the resolution in absentia.
An electronic signature and an advanced electronic signature (outside the already-mentioned case of a qualified electronic signature) shall have the equivalent legal effect of a handwritten signature where this has been agreed by and between the parties – Art. 13, para. 4 of the Electronic Document and Electronic Certification Services Act (“EDECSA”). The articles of association, the statutes or the rules for operation of the boards of ADs under Art. 241, para. 5 CA, Art. 242, para. 3 CA and Art. 244, para. 2 CA, may stipulate that the resolution in absentia can be signed with an electronic signature or an advanced electronic signature, i.e., there is prior consent within the meaning of Art. 13, para. 4 EDECSA by the parties to the resolution in absentia. The registration officials at the Commercial Register and the Register of Non-Profit Legal Entities are competent to perform only a formal external inspection of the documents that are attached to the applications for registrations and deletions of circumstances, resp. declaration of acts, and in the presence of such prior consent they are obliged to accept that the resolution in absentia is validly signed with an electronic signature, resp. advanced electronic signature, which has the legal effect of a handwritten signature.
Using an electronic signature in the resolutions in absentia is not admissible in a case where the law requires that, in order for the resolution to be valid, it shall have a notarized signature and content, for example the resolutions in OODs under Art. 137, para. 4 CA (see Art. 1, para. 2 pt. 1 EDECSA in conjunction with paragraph 1 item 1 of the Supplementary Provisions of EDECSA), and also in the case where the articles of association, the statutes or the rules for operation of the boards under Art. 241, para. 5 CA, Art. 242, para. 3 CA and Art. 244, para. 2 CA introduce a form for the resolutions in absentia that is more burdensome than the ordinary written form.
- In conclusion, the resolutions in absentia are undoubtedly a useful convenience that facilitates, simplifies and speeds up the decision-making process of the OOD and AD bodies. Unfortunately, the CA provisions do not allow this option for the general meeting of the shareholders. Therefore, it would be beneficial, by amendment to the CA, to introduce that approach also for public companies also for non-public ADs, more so in them, implementing it would be significantly facilitated due to the smaller number (by definition) of the shareholders.
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