The legal practice in Germany regarding the virtual organisation of general meetings of joint-stock companies proved to be a practical solution. As a result, the “Bundestag” and the “Bundesrat" adopted a law at the beginning of July this year on the introduction of virtual general meetings of joint-stock companies in order to incorporate the temporary regulation designed to combat the effects of Covid-19 into permanent legislation. This law also takes into account the specifics of the conduct of such a general meeting, whether it is purely virtual or hybrid. What is the situation in the Czech Republic?
The Czech Republic regulates virtual general meetings not only for joint-stock companies but also for limited liability companies. They can only be held if the company’s Articles of Association or Memorandum of Association allow it. In response to the Covid-19 pandemic, the Czech Republic adopted a law which, for a limited period of time, allowed them to be held even if they were otherwise not permitted by the Memorandum of Association or the Articles of Association. However, this period has now expired, so virtual meetings continue to be governed by standard legislation. For the sake of simplicity, the rest of the text only deals with the regulation of joint-stock companies, but the following can also be applied to limited liability companies.
Pursuant to the law, general meetings of joint-stock companies may be held using technical means, i.e. a wide range of means such as video conferencing, internet communication programs, services provided by telecommunications operators (SMS, MMS, voice services) and others.
However, the practical problem of such decision-making is the company’s obligation to verify the identity of the shareholder participating in such a meeting, which is not regulated by law. The following options can be considered: a) identity witnesses who declare that they know the person; b) pre-agreed passwords; c) means of identification such as bank identity; d) ID card with a chip; or e) qualified electronic identification systems.
This problem comes to the fore if it is necessary to draw up a notarial deed on the general meeting’s decision. The practice generally adopted by notaries is to verify shareholders by having them produced their ID on camera and having it verified by the chairperson. If the shareholder is a citizen of the Czech Republic, the notary may verify the identity of the person electronically using data from basic registers. Anyone (i.e. even without the presence of a notary) can verify the validity of Czech and Slovak ID cards in the register of lost and stolen documents. It can only be recommended that, if the chosen technical means allow it, the record of the verification of identity be kept for a certain period of time in order to avoid any disputes about the participants in the general meeting and about its course. The notary is normally present at the same place as the chairperson of the general meeting to verify the chairperson’s identity, but, for citizens of the Czech Republic, the electronic verification system can again be used, so the notary can only be present using technical means. The voting itself is then recorded in the notarial deed by the chairperson in cooperation with the notary.
For a Power of Attorney for participation in a general meeting, which must be signed with a certified signature, it is necessary to ensure that a reliable system for verifying its authenticity is laid down in the Articles of Association. It is common practice to deliver the Power of Attorney to the chairperson before the general meeting is held. Since July 1, 2022, this situation has been made easier for citizens of the Czech Republic by the fact that such a Power of Attorney can also be sent electronically, because the Digital Services Act provides that the document may be signed with a recognized electronic signature. This means that a shareholder – a citizen of the Czech Republic – will sign the Power of Attorney with a acknowledged electronic signature and the Power of Attorney sent in this way can be used to represent the shareholder at the general meeting of the company.
The law also allows for “per rollam” decision-making outside the general meeting. This possibility is automatically permitted by law for limited liability companies, but joint-stock companies must allow it in their Bylaws. Per rollam decision-making has stricter conditions than decision-making and voting by technical means, but its regulation provides less room for potential disputes.