Germany’s lower and upper houses of parliament have passed the federal government’s package of measures designed to tackle the crisis surrounding the coronavirus and assist others in overcoming its economic impact.
The coronavirus pandemic is having a substantial impact on the overall economy. The Gesetz zur Abmilderung der Folgen der COVID-19-Pandemie (Act to Mitigate the Effects of the COVID-19 Pandemic) introduces major legal changes. We at the commercial law firm MTR Rechtsanwälte can report that these changes also affect business law.
The scope of the measures ranges from short-time allowance (Kurzarbeitergeld), loans and rescue funds, to changes to insolvency law and company law. In addition to preserving the business and jobs as well as ensuring liquidity, it is necessary for companies’ decision-making capacity to be maintained.
To ensure that important decisions can still be taken in times of crisis, the federal government has also strengthened the capacity of businesses, cooperatives, homeowners’ associations, as well as other associations, to act and make decisions. Moreover, stock corporations will now be able to hold virtual annual general meetings.
To ensure that companies remain able to act and make decisions, the legislation provides for new ways of conducting annual general meetings in stock corporations (Aktiengesellschaft, AG), commercial partnerships limited by shares (Kommanditgesellschaft auf Aktien, KGaA), mutual insurance companies (Versicherungsvereins a.G., VVaG), and European companies – also known as a “Societas Europaea” (SE for short) – shareholders’ meetings in limited liability companies (GmbH), general meetings and representatives’ assemblies in cooperatives, and members’ meetings in associations. In the case of the AG, KGaA, and SE, for instance, it will be possible to participate in the annual general meeting online without the need for authorization pursuant to the articles of association. The legislation also allows annual general meetings to be held remotely.
Furthermore, it will be possible to reduce the notice period to 21 days. The board of directors will be able to arrange advance payments on the net profit, even in the absence of provisions to this effect in the articles of association.
The annual general meeting is to be held within the financial year, which represents an extension to the previous eight-month deadline. Since virtual annual general meetings without compulsory attendance are uncharted territory, the risk of legal challenges will be largely excluded.
The plans also feature comparable measures to facilitate virtual meetings and decision-making mechanisms that take place outside of meetings for associations and cooperatives.
Germany’s Federal Financial Supervisory Authority, the BaFin, is also revising its supervisory role in response to the circumstances brought about by the coronavirus pandemic, including, for example, with regards to the disclosure of financial circumstances when grading creditworthiness, as well as with respect to obligations pertaining to conduct and information in securities trading.
Lawyers with experience in the field of business law can offer advice.