Digitalization in stock corporation law until the end of the COVID-19 pandemic

Stock corporation law is the first part of German corporate law to be affected by digitalization. In 2009, well before the EU Digitalization Directive, the German government implemented the ARUG I (the German Act Implementing the First Shareholder Rights Directive (Gesetz zur Umsetzung der ersten Aktionärsrechterichtlinie – ARUG I)), making it possible for shareholders to participate online in general meetings and exercise their shareholder rights electronically by means of a provision or authorization of the board of management in the articles of association (see section 118 (1), sentence 2 of the German Stock Corporation Act (AktG)).

However, this hybrid form had little actual application until the COVID-19 pandemic. It was only due to the constraints of the pandemic that the German Act Concerning Measures Under the Law of Companies, Cooperative Societies, Associations, Foundations and Commonhold Property to Combat the Effects of COVID-19 (Gesetz über Maßnahmen im Gesellschafts-, Genossenschafts-, Vereins-, Stiftungs- und Wohnungseigentumsrecht zur Bekämpfung der Auswirkungen der COVID-19-Pandemie (COVMG)) was implemented, making completely virtual general meetings possible. Once participants grasped the technical possibilities and developed experience in this area, virtual general meetings became an actual alternative for many companies and their shareholders. The avoidance of long travel times typically increased the number of participants, and the possibility of submitting questions by electronic means no later than one day before the meeting led to a curtailment of the right to ask questions but also led to better-prepared answers. Overall, the COVMG provided significant simplifications to the detriment of shareholders on a number of points. In addition to curtailing the right to ask questions, the Act created a basis for shortened periods for requests for additions to the agenda – deviating from section 122 (2) of the AktG – and shortened the notice period under section 123, sentence 1 and sentence 5 of the AktG.

Act on the Introduction of Virtual General Meetings of Stock Corporations

It is therefore not surprising that the government draft published in April 2022 for the permanent anchoring of virtual general meetings in the AktG envisaged giving shareholders at virtual general meetings the same rights as at in-person general meetings. Following a number of amendments by the Legal Committee, the Act on the Introduction of Virtual General Meetings for Stock Corporations entered into force on 27 July 2022.

This requires a provision in the articles of association limited to a maximum of five years for the holding of virtual general meetings. In addition, the new section 118a of the AktG provides a large number of requirements for holding virtual general meetings. The new provision gives shareholders more rights. Requests can now be submitted during virtual shareholders' meetings by means of video communication. In addition, the new section 130a of the AktG grants shareholders the right to speak via video communication, which also includes requests for information (section 131 (1) of the AktG), follow-up questions (section 131 (1d) of the AktG) and further questions (section 131 (1e) of the AktG). Although the management board may stipulate that requests for information must be submitted by electronic communication no later than three days before the meeting, follow-up questions must still be made possible during virtual general meetings.

However, the transitional provision of section 26n (1) of the Introductory Act to the German Stock Corporation Act (EGAktG) still applies until 31 August 2023, which will allow virtual general meetings without corresponding provisions in the articles of association until this date. Companies wishing to continue holding virtual general meetings after 31 August 2023 should use the time to amend their articles of association.