Can we convene a General Meeting with respect to the government’s emergency measure limiting free movement of persons?

Author: Mgr. Pavel Víšek a Zuzana Jurová

Can we convene a General Meeting with respect to the government’s emergency measure limiting free movement of persons?

Emergency measure of the Czech Republic’s Government limited free movement of persons with effect from March 16, 2020, limiting the movement to movement relating to provision of basic necessities. Can the companies (especially capital companies – s.r.o. and/or a.s.) convene a General Meeting under these circumstances?

Given that holding a General Meeting is necessary for functioning of the company and its compliance with obligations under Czech legislation, therefore convocation of the General Meeting falls under the exception to the general prohibition as it enables business or other similar activity. It is, however, not recommended to meet in person due to possible viral transfer. What other possibilities do companies have?

One of the instruments for decision making outside the General Meeting anticipated by law is decision making per rollam. Deciding per rollam means that the proposal of a decision is sent to the members/shareholders together with any documents required for its adoption and the member/shareholder then replies with his statement. Limited liability companies (s.r.o.) can, pursuant to Section 175 (1) of Czech Business Corporations Act (hereinafter “CBA”), make decisions per rollam assuming that the Memorandum of Association does not exclude decisions taken outside of the General Meeting. Unlike Limited Liability Companies, decisions per rollam in Joint-Stock Companies (a.s.) must be expressly permitted under the company’s Articles of Association pursuant to Section 418 (1) of CBA.

Memorandum of Association of a Limited Liability Company as well as Articles of Association of a Joint-Stock Company can permit exercising the members’ right to participate in the management of the company at the General Meeting using appropriate technical facilities (e. g. various forms of videoconferencing, services telecommunication operators etc.). Such permission in Memorandum of Association or in Articles of Association must be explicit. Furthermore, conditions pursuant to Section 167 (2) and/or Section 398 (2) of CBA must be met, meaning that conditions for decision-making using appropriate technical facilities must be defined in a manner so as to allow the company to verify the identity of the person authorised to exercise the voting right and to determine the business shares associated with the exercised voting right.

The members and shareholders of business corporations can limit the number of people present at the General Meeting also by proxy. Especially when non-controversial topics are on the agenda, a representative (or a few) can be chosen by the members or shareholders to participate at the General Meeting and to adopt decisions on their behalf. Two or more members or shareholders can grant a power of attorney to the same representative under the condition that they are all informed by the representative, in good time before the date of the General Meeting, of a possible conflict of interests. By decreasing the number of people present at the General Meeting the risk of transfer of the disease could be decreased.

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