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Virtual Annual General Meetings (e-AGMs) – A danger for shareholder rights: High-ranking expert panel discussed restrictions on shareholder rights in the coronavirus crisis
Together with Initiative Minderheitsaktionaere, aktionaersforum service GmbH held its first live webinar entitled “Virtual General Meetings – A Danger for Shareholder Rights?”. A high-ranking panel of experienced experts examined the practice of e-AGMs introduced in the course of the COVID-19 pandemic with regard to the protection of shareholders’ rights from several angles. The participants of the discussion, which was moderated by ntv stock exchange moderator Katja Dofel, were leading experts from science, politics and business, among them Prof. Dr. Tim Drygala (University of Leipzig), Prof. Dr. Heribert Hirte (member of the Bundestag, CDU), Hendrik Schmidt (Corporate Governance Center at DWS) and Robert Peres (Initiative Minderheitsaktionaere). Restrictions on the right of shareholders to ask questions at e-AGMs The experts stated that they understood the fact that the emergency law adopted in the context of the coronavirus crisis has shortcomings. At the same time, however, they agreed that in particular the right of shareholders to ask questions, the right to submit motions and to challenge resolutions within the framework of e-AGMs has been severely restricted by the new regulations. As a result, the shareholders’ meeting has been downgraded to a one-sided information event by the executive bodies of the respective companies. Hendrik Schmidt, an expert in good corporate governance at the investment company DWS, who virtually attended more than 15 general meetings in the current season, summed up that the meeting in its current form is almost exclusively reduced to a virtual vote and thus no dialogue between companies and shareholders is guaranteed. This dialogue will be even more important next year when ARUG II and the associated “Say on Pay” scheme take effect and shareholders vote on the remuneration of Management Boards. Schmidt is therefore not the only one who is taking a critical view of a purely virtual vote without a previous debate on this matter. Stumbling blocks include legal certainty and the risk of transmission disruptions According to the experts, the restrictions on the right to ask questions, the right to submit motions and to challenge resolutions are essentially due to the risk of rescissory actions, e.g., in the case of transmission disruptions. Against this background, Prof. Drygala from the University of Leipzig sees the creation of maximum legal certainty as an essential prerequisite for a broad acceptance of virtual general meetings in the future. This is indicated by the fact that lawmakers have already provided for the possibility of virtual meetings for around ten years, but companies had not yet made use of this option for fear of legal challenges. Prof. Drygala therefore proposes transferring the risk of transmission disruptions of the Annual General Meeting to shareholders. This would provide the basis to grant online participants the legal status of ordinary participants of the meeting. Prof. Hirte also sees legal certainty as a decisive factor and points out that what is needed “isn’t special legislation but an intensified discussion on the right to initiate procedural and legal challenges.” Due to the obvious shortcomings in the right to ask questions and the right to challenge resolutions, he clearly rejected the extension of the current emergency legislation. He said: “We need to think about the ‘ordinary’ e-AGM and not about the ‘extraordinary’ crisis-related e-AGM. And we need to make the necessary legislative changes to put this on firm footing.” Hybrid solution is the future of the Annual General Meeting There was a consensus among the experts that a hybrid solution consisting of a physical presence and virtual participation would likely be the future form of the Annual General Meeting. In this context, Robert Peres, Chairman of the Board of Management of Initiative Minderheitsaktionaere, calls for a further strengthening of shareholder democracy and sees the current crisis as an opportunity to also utilize technological progress in the area of shareholder rights for the benefit of all parties. During the discussion, the experts already made initial proposals for safeguarding shareholder rights in this kind of solution. Hendrik Schmidt, for example, suggested that a neutral proxy representative – for example, a notary – could control virtual questions and speeches. Prof. Drygala advocated the pragmatic approach that shareholders should have the choice of whether to participate virtually or to participate in-person in the Annual General Meeting as was previously the case. Aktionaersforum and Initiative Minderheitsaktionaere plan further events on the topic of shareholder rights Following the first successful live webinar, Aktionaersforum and Initiative Minderheitsaktionaere are planning further joint events to strengthen shareholder rights and shareholder democracy in Germany. In addition, aktionaersforum service GmbH will hold the event planned for March 2020 and the symposium on capital market law, which was cancelled due to the COVID-19 pandemic, at a later date and will announce the new the date in a timely manner. Holger Hoffmann, Managing Director of aktionaersforum service GmbH, assessed the high level of participation in the live webinar and the lively discussions as a good sign for shareholder culture: “After the Symposium on Capital Market Law planned for March had to be cancelled due to the coronavirus crisis, we are pleased that we were able to maintain the constructive dialogue regarding the protection of shareholder rights with our first live webinar.” Robert Peres, Chairman of the Board of Management of Initiative Minderheitsaktionaere, said: “A live webinar allows us to address current topics more quickly and directly, such as the current special regulations for holding general meetings. I am therefore looking forward to a continuation after the summer break.” Press contact: Elke Strothmann Tel: +49 (0) 2202 2807 0 E-Mail: strothmann@Agentur-Strothmann.de About the aktionaersforum service GmbH Founded in 2014, aktionaersforum service GmbH has set itself the task as an independent and neutral mediator to set new standards for efficient stakeholder communication and modern corporate governance. It offers various online products and solutions that enable administrations of listed companies, shareholders, institutional investors, shareholder associations and other stakeholders to enter into a continuous and solution-oriented dialogue with each other. The Symposium on Capital Market Law provides a platform for this dialogue and exchange. www.symposium-kapitalmarktrecht.de About Initiative Minderheitsaktionaere Initiative Minderheitsaktionaere e.V. contributes to the improvement of the legal framework for shareholders and in particular the position of minority shareholders. Its objectives include, for example, the creation of genuine collective legal protection, a reform of the right to deficient resolutions and the strengthening of the judicial review process. initiative-minderheitsaktionaere.org End of Media Release Issuer: aktionaersforum service GmbH Key word(s): Finance
17.06.2020 Dissemination of a Press Release, transmitted by DGAP – a service of EQS Group AG. |
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