The Outbreak of the Covid – 19 virus and Remote Holding of Shareholder’s Meetings

The outbreak of the COVID -19 virus pan-epidemic has forced people to remain at home and conduct work remotely in these strange times. Governments have issued policies asking citizens to observe social distance rules and to avoid gathering together. In addition, swathes of populations endure lockdowns and self–isolations.  All these newly introduced measures to fight against the coronavirus also limit the possibility of holding meetings of shareholders within companies in person. The question arises as to whether the conduct of digital meetings by using modern techniques such as Skype and video conferencing are permitted by Polish company law.

First of all, action by the shareholders normally binds the company only when taken in a regular or properly called meeting after (mostly written) notice including the agenda required by a company’s articles of association has been given. The manner of digitally held meetings for instance via a video conference which allows the shareholders communication without the face to face presence is still rare and certainly not foreseen in many current texts of companies articles of associations. Furthermore, the Polish legislator already introduced a new act amending the Polish Commercial Companies Code at the beginning of September 2019 according to which participation in shareholders meetings of private limited companies could be conducted by using means of electronic communication including the transmission of the meeting, two -way communication between shareholders and exercising of the voting in person or by proxy. However, the attending and transacting of business at such a digital meeting will only be allowed after articles of associations of companies have been tailored to the new regulation and this may cause problems.  The change of the terms of these articles usually requires the form of a notary deed (e.g. within private limited liabilities companies) and this does certainly not serve the purpose of a meeting to be held in an emergency situation such as the outbreak of the current pandemic. If companies have failed to date to incorporate the aforementioned changes into their articles of associations under their authority and to prescribe the holding and voting at their meetings using, for instance, the internet, then it is often conceded as a general rule in many states,  including Poland, that action approved informally by all shareholders will bind the company. Difficulties may occur if less than unanimous approval is given but in these trying times of the coronavirus pandemic, any disapproval to holding a digital meeting might be regarded as a violation of the sort of fiduciary relationships between shareholders in privately held limited liabilities companies, not only in Poland.

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