In the present health crisis context, the French government adopted on 25 March 2020 an ordinance "adapting the rules governing meetings and deliberations of assemblies and governing bodies of legal persons [...] because of the Covid-19 epidemic".

This ordinance authorizes, in the current context, governing bodies of legal persons and private law entities without legal personality to meet remotely, and general meetings to be held behind closed doors. It is therefore issued on a temporary basis until 30 July 2020  with retroactive effect as of 12 March 2020, allowing for the regularization of meetings that have already been held remotely or behind closed doors.

Its main provisions are described below, with a special focus on listed companies. Regulatory provisions detailing the ordinance’s provisions have completed the crisis mechanism in place.

REMOTE ATTENDANCE BY MEMBERS OF GOVERNANCE BODIES

While "remote" attendance of members of governance bodies was already possible, it remained subject to a number of restrictions. For example, for a board of directors of a French société anonyme, its internal rules and regulations would have to explicitly permit it.

The ordinance reverses this principle by stating that those who attend remotely are deemed to be present; there is no longer any need for such a provision in the articles of association or the internal rules and regulations, and any clause to the contrary becomes unenforceable. The ordinance also generalizes the use of written consultations for decision-making by collegial administrative, supervisory or management bodies.

The possibility of convening these governing bodies remotely will apply to all decisions, including the closing of accounts, which until now required a physical meeting.

HOLDING OF THE GENERAL MEETING BEHIND CLOSED DOORS

By decision of the board of directors , the general meeting may be held "behind closed doors", i.e. without the shareholders or their proxies being physically present.

The possibility of holding a meeting behind closed doors requires that the meeting be convened in "a place that, on the date of the convening notice or on the date of the meeting, is subject to an administrative measure restricting or prohibiting collective gatherings for health reasons". This possibility seems to be still open to this day for meetings bringing together a significant number of partners, particularly in view of Decree No. 2020-663 of 31 May 2020, which prohibits "any gathering, meeting or activity on the public highway or in a place open to the public, involving more than 10 people simultaneously throughout France^[1]" and authorises the organisation of gatherings and meetings under the condition of strict compliance with health measures, including "a physical distance of at least one metre between two persons, which "must be observed in all places and under all circumstances^[2]".

Thus, holding a meeting behind closed doors without physical presence remains permissible even if the confinement measures have ceased on the date of the meeting, provided they were in force on the day the meeting was convened. According to the report to the French President, the convening notice must be understood broadly, to include meeting notices (“avis de réunion”) published by listed companies.

This option to hold the general meeting behind closed doors without physical presence will avoid postponing it. The payment of dividends will not have to be deferred (thus avoiding the need for interim dividends), as will the renewal of issuers' financial delegations, which are often essential to their financing. Lastly, this will make it possible to pay part of the corporate officers' compensation, which is subject to a positive say-on-pay vote.

Certain proxy advisors are opposed to such remote meetings and have publicly stated their preference for postponing the meeting until after the end of the lock down measures. According to them, postponement to a date when companies will have more visibility on the financial year 2020 could lead companies to reconsider the amount of the dividend for 2019 in view of the impact of the coronavirus on their business.

It should be noted that the ordinance softens the use of written consultation for meetings when this alternative means of participation is already provided for by law, by making it possible for any assembly decision to be made, without the need for a clause in the articles of association or in the contract of issuance and with any clause to the contrary being unenforceable.

Convening shareholders' meetings

For companies that have already carried out the formalities for convening an in-person meeting, the change to a remote meeting will not require the renewal of these formalities (and the regulatory delay will not start running again). In this case, listed companies will have to inform their shareholders by means of a press release.

The ordinance has anticipated a possible impossibility to convene registered shareholders by mail (e.g. postal services not functioning). To this end, it is specified that the meeting will not be invalidated simply because it was impossible to convene the meeting by mail "due to circumstances beyond the company's control". This protection, which only benefits to listed companies, supposes that the issuer has attempted in practice to convene the meeting.

Taking into account remote attendance

The ordinance provides that shareholders who participate in the meeting by means of a teleconference or audio-visual conference call allowing for their identification will be deemed present for the purposes of calculating a quorum and a majority. In practice, "live" voting will be excluded for the majority of listed companies due to the absence of technical means allowing to verify the participants' status as shareholders in real time.

Thus, the usual procedures for remote participation (postal vote or proxy or chairman's proxy) will prevail in the absence of physical participation. The implementing decree of the ordinance clearly favours electronic means on this point, in two respects.

Firstly, in the case of a postal vote, the body competent to convene the meeting may authorise the transmission of voting instructions by electronic message to the electronic address indicated in the convening notice. The use of electronic voting during the meetings at the initiative of this body is also open in public limited companies (sociétés anonymes), limited partnerships with shares (sociétés en commandite par actions) and limited liability companies (SARL), including for meetings of bondholders and holders of securities giving access to the capital, without the need for a statutory clause to do so. However, in the latter case, the need to set up a website exclusively dedicated to the purpose will continue to apply.

Secondly, in the event of a vote by proxy (excluding blank proxy forms), and again by decision of the body competent to convene the meeting, the proxy forms may be sent by e-mail to the e-mail address indicated in the convening notice. In public limited companies and limited partnerships limited by shares, the mandates as well as the instructions transmitted by the proxy may validly reach the company up to the fourth day prior to the date of the meeting.

This remote access is also becoming the norm with regard to the shareholders' right of communication prior to the meeting, which will now be exercised electronically. However, this presupposes that the shareholder specifies his or her e-mail address in his or her request.

Problems relating to remote attendance

In addition to the impossibility of voting "live", it will probably be impossible to make a request during the meeting to add (in practice, this applies to a request for the removal of a director) or amend a resolution. Similarly, oral questions asked during the meeting could also be jeopardized.

Companies will nevertheless remain free to safeguard these rights in a potentially diminished form. Thus, shareholders could possibly submit beforehand oral questions or amendments to the meeting's resolutions and this could be organized in a manner similar to that for written questions.

However, the implementing decree of the Ordinance has resolved some practical issues relating to the holding of remote meetings::

• on the one hand, when it cannot be performed by the Chairman of the Board or, in his absence, by the person provided for in the Articles of Association, the chairmanship of the meeting may be entrusted by the Board to any corporate officer, and the two scrutineers may be chosen from among the shareholders or even from outside;
   
• on the other hand, the prohibition provided for by the regulatory provisions to change the mode of participation for a shareholder who has already cast a postal vote, sent a proxy or requested an admission card is lifted by the decree, so as to allow him/her another mode of participation. Thus, a shareholder who had requested to be present may opt for a remote vote until the day before the meeting is held.

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[1] Art. 3 I of Decree No. 2020-663 of 31 May 2020 prescribing the general measures necessary to deal with the Covid-19 epidemic in a state of public health emergency.
[2] Art. 1 of Decree No. 2020-663.

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