Extension of the effects of the Grand Ducal Regulation of 20 March 2020 regarding the means used to hold general meetings and other meetings of companies' corporate bodies. Extended period for the approval and filing of the annual accounts.
Background
To contain and slow the spread of Coronavirus (COVID-19), the Luxembourg Government declared a three-month period state of emergency, until 24 June 2020, following the adoption of a Grand-Ducal Regulation dated 18 March 2020, and a law dated 24 March 2020.
Specific measures introduced by the Regulation
Considering the travel restrictions, social distancing quarantines, and other measures applicable since the beginning of the pandemic which often hinder a physical meeting of the board or shareholders, the Luxembourg Government adopted measures facilitating the corporate governance of the companies (including Luxembourg listed companies and Luxembourg investment funds with legal personality) and other legal entities.
The Grand-Ducal Regulation of 20 March 2020 introduced temporary and derogative (from the ordinary Luxembourg company law provisions) measures concerning the holding of meetings in companies and other legal entities (the Regulation), which apply regardless of (i) any contrary provisions or lack of provisions in their articles of association and (ii) the number of participants to the meetings.
Shareholders meetings
According to the Regulation, companies have been allowed to hold general meetings of shareholders in virtual-only form, without a physical meeting. In this respect, the shareholders have been able to attend the meetings and exercise their rights:
- By voting remotely in writing or by electronic means, provided that the resolutions or decisions to be taken have been published or sent to them in advance;
- Through a proxy holder designated by the company; or
- By video conference or any other means of communication allowing shareholders’ identification.
Shareholders who participated by such means have been deemed present for the purpose of the quorum and the majority. These provisions equally applied to meetings of bondholders.
Management body meetings
The same flexibility applied to meetings of the board of managers or directors, supervisory boards or other corporate bodies. The Regulation set forth that all members may hold its meeting without a physical meeting by:
- adopting written circular resolutions; or
- participating in a meeting by video conference or any other means of communication allowing the members’ identification.
Participation by such means was deemed presence for the purpose of quorum and majority requirements calculation.
Extension of the time period for convening the annual general meeting of shareholders
Finally, in accordance with the Regulation, the companies have been allowed, even if otherwise provided in their articles of association, to call their annual general meetings on the later of the following two dates:
- The date falling six (6) months after the end of its financial year; and
- A date within a period ending on 30 June 2020.
Companies which had already convened their meetings prior to the entry into force of the Regulation have also been entitled to use these options, provided that they notify the shareholders in the same form as the initial convening notice or by way of publication on their website at the latest three (3) business days prior to the date of the convened meeting.
Extension of the validity period for virtual meetings
As the Regulation was adopted in the context of the state of emergency, the measures described above were due to cease to apply as of the end of the state of emergency at the latest, i.e. 24 June 2020. In this context, the Luxembourg Parliament has adopted on 20 June 2020 a new law allowing for the holding of all general meetings and meetings of corporate organs in the virtual form provided for in the Regulation during an exceptional period of nine (9) months following the end of the last financial year of the companies (the Law of 20 June 2020). The Law of 20 June 2020 was published in the Official Journal on 25 June 2020 and entered into force on the same day.
Under the provisions of the Law of 20 June 2020 (and earlier under the provisions of the Regulation), are authorised, the holding of virtual meetings or taking the vote in writing despite the absence of the authorisation, or even notwithstanding the prohibition, of such manner of proceeding in the articles of association of a company. After the cessation of the effects of the Law of 20 June 2020, the companies may still have recourse to the virtual decision-making or written resolutions subject to the ordinary rules set out in the company law and in their articles of association.[1]
Extension of the deadlines for the approval and filing of annual accounts
In addition to the above, on 22 May 2020 was adopted the law which has introduced a set of temporary measures in relation to accounting and filing requirements (the Law of 22 May 2020). The Law of 22 May 2020 became effective on 29 May 2020 and provides for a three (3)-month extension period for the approval, filing and publication of annual accounts and consolidated accounts (as applicable), along with related reports, and a suspension during the same period of all criminal sanctions for management bodies in case of late submission for approval by the shareholders and/or late filing with the Luxembourg Trade and Companies Register and publication.
The extension only applies to annual or consolidated accounts, related reports (such as management report, auditor’s (commissaire) report or independent auditor’s (réviseur d'entreprises agréé) report) and general meetings of shareholders regarding financial years ended no later than the date on which the state of emergency ends (i.e. 24 June 2020), and for which the filing and publication or holding of general meetings deadlines had not yet passed as of the date the state of emergency was declared, i.e. 18 March 2020.
By way of example, a company whose financial year ends on 31 December 2019 may exceptionally have its annual accounts approved by 30 September 2020 and file and publish its accounts and reports by 31 October 2020, whereas, under normal circumstances these deadlines would be 30 June 2020 and 31 July 2020 respectively.
For any questions regarding the above, please do not hesitate to contact our specialists.
[1] By way of reminder, in the public and private limited companies, a special authorisation in the articles of association is required for the holding of the general meetings of shareholders with the participation via telephonic or video conference, or for casting the vote in writing. Written resolutions of shareholders are generally authorised (subject to exceptions) in private limited companies, but in public limited companies, they are allowed only when there is a single shareholder.
The holding of meetings of the board of directors/managers via telephonic or video conference is allowed in private and public limited companies, unless the articles of association provide otherwise. Written resolutions of the board of directors/managers must, however, be specifically authorised in the articles of association and be taken unanimously by all the board members.
