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The long-awaited government enactment on the holding of the general meeting of shareholders in the context of COVID-19 outbreak was finally passed in the form of the Government Emergency Ordinance No. 62/2020 that entered into force on May 8 (Ordinance 62).
However, Ordinance 62 lost the momentum for the annual general meetings of shareholders (GMS) of listed companies, the most vulnerable category of companies in terms of holding GMS in the particular context triggered by the coronavirus. It therefore states that it does not apply to listed companies.
Since listed companies were required by law to hold the GMS until the end of April, they needed to manage observing the strictly regulated legal provisions regarding convening and holding of GMS, while also protecting their stakeholders, in line with the measures, recommendations and best practices developed in the coronavirus environment.
Whereas legislative measures tempering the rigorous legal requirements regarding GMS would have certainly helped, listed companies have still generally succeeded to overcome the hurdles and organize the GMS with due observance and care to the interests of the shareholders. Investors’ understanding of the context and observance of the strong recommendations to vote by correspondence and, where possible, participate to GMS via remote means, were certainly of important support for the companies.
Ordinance 62 comes fairly late for non-listed companies as well, in particular for joint stock companies, since they are required to organize the GMS not later than the end of May, on the basis of a prior call notice published at least 30 (thirty) days in advance. Practically, many companies might have already published the convening notices; however, the new temporary legal provisions still bring some relief and support.
In brief, the measures approved by Ordinance 62 (applicable to non-listed companies only):
Note: The provisions regarding the calling and holding of GMS also apply to the meetings of bondholders
Note: The initial proposal was to allow that the call notice be reduced in exceptional situations; the provision was not kept in Ordinance 62, consequently the GMS should be called with the observance of the call notice period provided by law or by the articles of association
Note: During this period, companies that have not already called a GMS, could benefit from this legal provision and avoid the formalities and costs associated with the publication of the call notice with the Official Gazette; however, such alternative methods would only be effective to the extent updated contact information of the shareholders is available to the company which, in certain cases (for example, in companies with a significant number of shareholders) might be difficult to achieve
Note: Ordinance 62 does not prohibit the holding of the GMS in physical format; however, companies deciding to use this format will need to observe the COVID-19 related measures and recommendations
Note: Romanian companies rarely used in the past electronic means for holding GMS and the burden associated thereto (costs, technical complexities) are expected to continue to limit the use of remote means in the near future. Nevertheless, during the last 2 (two) months, companies became more familiar with remote technologies, paving the way for the use thereof on a larger scale, including for GMS
Note: Specific consideration should be given to any intention to postpone or revoke the GMS, as this right should only be exercised in exceptional circumstances triggered by measures imposed by the authorities
Note: Initially, the intention was to provide that no GMS resolution could be annulled due to failure to observe the requirements regarding holding and voting in the GMS; however, because, arguably, of the legality and constitutional concerns, the provision was amended to only apply when all shareholders agreed and, implicitly, waived the requirements that were not observed