COVID-19: Special rules regarding general meetings of shareholders

Recently it was published in the Official Gazette of Romania the Government emergency ordinance no. 62 regarding the adoption of certain measures concerning companies regarding the organisation of meetings of their corporate bodies (”GEO 62” ), applicable starting with 8 May 2020.

GEO 62 contains provisions on the convening and holding of the general meetings of shareholders (GMS) of the companies regulated by Company Law no. 31/1990 (”Company Law”) during and following the state of emergency, as detailed below. To be noted that GEO 62 is intended to complete and/or temporarily and indirectly amend the Company Law.

The current form of GEO 62 took shape following the observations and comments received during the public consultation procedure initiated by the Ministry of Justice on its website during 15 and 22 April 2020. According to the public available information, comments were received by electronic means regarding the legislative project from reputable entities and organizations, listed companies (probably the most affected in this regard because of their large number of shareholders), operators from regulated markets, associations of investors on capital markets, law firms, professional associations and other specialists in corporate law. Moreover, the Ministry of Justice mentioned that the arguments presented during the consultations and the results of the application of GEO 62 shall be taken into consideration for a future project of amendments of Company Law, if such project shall be consider necessary.

As per the explanatory memorandum of GEO 62, one of the reasons considered for the preparation and in the end for the adoption of this emergency ordinance is the obligation that companies have as per Company Law to convene and hold a GMS in 5 months from the end of the financial year in view of taking decisions on essential aspects for the functioning of the company such as: the approval of the annual financial statements and the establishment of the budget. Therefore, having in view the inability of the shareholders to physically met in view of expressing their votes in the GMS because of the current context due to the COVID-19 pandemic and the fact that the holding a GMS by correspondence is limited or conditioned by the existence of express provision in the constitutive deed of a company, GEO 62 is offering solutions to companies facing such problems.

An important provision of GEO 62 is the extension of the term provided by the Company Law for joint-stock companies for holding the ordinary GMS for the approval of the financial statements until 31 July 2020. 

It is worth mentioning that the provisions of GEO 62 are applicable to:

  • GMSs convened prior to the GEO 62’s entry into force, but set to take place during the state of emergency
  • GMSs convened after the GEO 62’s entry into force and held during the state of emergency
  • GMSs convened during the state of emergency and held after the expiry of the state of emergency, and
  • GMSs convened and held within two (2) months from the expiry of the state of emergency
  • Meeting of collegial (managing) corporate bodies taking place during the state of emergency or within 30 days from the expiry of the state of emergency.

The rules provided for GMSs are also applicable to bondholders’ meetings.

It is expressly mentioned that the provisions of the ordinance are not applicable to the companies governed by Law no. 24/2017 on issuers of financial instruments and market operations following a proposal from the FSA taking into consideration that the issuers of financial instruments are held by a 4-months term from the end of the financial year to publish the financial report and such term was already surpassed when GEO 62 entered into force. 

The provisions of GEO 62 refer to:


1. Alternative methods for convening GMSs available to the company’s competent corporate body 


Besides the means stipulated by the Company Law (i.e. publication in the Official Gazette, Part IV and in a wide circulation newspaper in the company’s registered office area), GMSs may be convened through any means of remote communication ensuring the transmission of text using the contact details sent in writing by each shareholder. The same means can be used for the transmission of any amendments of the agenda as per the shareholders’ proposals.

According to GEO 62, the means of distance communication are the following: registered letter, courier, electronic letters having incorporated an extended electronic signature (if such signature exists), telefax or other distance communication means that allow transmission of text. In addition, the convening notice shall be published on the company’s website, if such exists.

From the above listed methods, the competent corporate body may choose one of them or a combination therof.


2. Methods of communication of the documents/ information with respect to the items on the agenda


In principle, GEO 62 provides that the information and documents with respect to the items on agenda shall be made available via publication on the company’s website. If the company does not have a website, the documents or information shall be provided to the shareholders via email or ultimately, if email delivery is not possible, at the request of shareholders, these shall be provided to them  by mail or courier.


3. Procedures for holding the General Meetings of Shareholders


During the state of emergency, the GMSs may be held exclusively by correspondence or through electronic means of distance communication, such as phone conference or video conference, even in case of express prohibition within the company’s articles of association.

In such cases, if the agenda includes matters requiring a secret vote, the competent corporate body shall ensure that the secrecy of the vote is maintained even in case of meetings held by correspondence or by means of distance communication.

In addition, in case of voting by correspondence, the shareholders shall ensure that the transmitted vote reaches the company, through the chosen methods, prior to the date of the meeting. This also applies if the shareholders participate through a proxy in the general meeting.

GEO 62 offers companies a legal framework for using alternative methods for convening the GMS, respectively a framework that companies may apply in order to fulfil their legal obligation to convene such meetings. The ordinance also aims to create equality between shareholders in relation to their participation and exercise of voting rights in the general meetings.