COVID-19: Extension of interim changes to company law
This updated briefing deals with the further extension of the interim period under the Companies Act (Miscellaneous Provisions) (Covid-19) 2020 – until April 30, 2022 – in which simpler and longer measures streamlines can be taken in order to comply with certain company laws and ancillary requirements.
For the most part, the Companies (Miscellaneous Provisions) Act 2020 (Covid-19) (the “Covid Law”) amends the Companies Act 2014 (the “Companies Act”) and the Industrial and Provident Societies Act 1893 (the “Law of 1893”), each on a temporary basis, so that, despite the challenges posed by the pandemic, the entities can continue to operate in accordance with the relevant provisions of those laws.
In general, the provisions apply for an interim period which, having been extended, is currently due to expire on April 30, 2022.1. This period may be further extended, from time to time, at the request of the Minister responsible for enterprise, trade and employment.2, after consulting with the Minister of Health, if he is satisfied that such an extension is in the public interest.
Nature of modifications
The impact of the COVID-19 crisis on entities varies depending on the nature of a particular business. Nevertheless, directors, shareholders and other stakeholders must continue to be able to communicate with each other and make decisions, keep records and execute documentation despite restrictions on travel, physical meetings and presence in the workplace. The Covid law aims to facilitate this by amending the law relating to annual general meetings of companies (“AGA”), extraordinary general meetings (“EGM”) and meetings of creditors. It also makes certain changes to the examination and winding-up procedures.
Execution of instruments
Currently, the management of some companies can be dislocated. In addition, it may sometimes happen that the corporate seal is in one place and the directors, secretary and registrants are in another. To remedy this, the Covid law allows, during the interim period, that the sealed documents be executed in duplicate and are then considered as a single document.
The Covid law relaxes some of the legal requirements for convening and conducting âgeneral meetingsâ. For these purposes, these include general meetings, EGMs, meetings of a particular category of shareholders and arrangement meetings.
During the interim period:
- a company which was to hold its general meeting in 2021 can postpone it to a date until April 30, 2022;
- a company does not need to hold a general meeting in a physical location, but can hold it in whole or in part by electronic means, provided that all participants have a reasonable opportunity to participate;
- business leaders may, when they deem it necessary to comply with public health directives, cancel, change location or modify the procedures for holding the general meeting or can cancel this meeting due to exceptional circumstances and unexpected;
- When a general meeting is conducted electronically, the president may vote to decide on a resolution by show of hands of participating members using such technology when he is of the opinion that he can identify the parties. members entitled to vote and verify the content of the voting instructions relating to the resolution; and
- notwithstanding any provision of the articles of association of the company, each member and proxy who participates in a general meeting by electronic means will be counted in the quorum.
The law provides that directors can withdraw a resolution to approve a dividend or propose an amendment to that resolution to provide for a lower dividend than initially recommended, due to the real or perceived consequences of Covid-19 on the business of the company. The provision appears to be quite limited in practice as it requires all members to accept the action of the directors for it to be effective.
The Covid law further sets out requirements, for cases where a general meeting is to be held in whole or in part by electronic means, for matters such as the required content of notices (for example, details of the electronic platform and procedures for participation, communication and voting), identification of participants, security of electronic platforms and the consequences of failure or disruption of the use of electronic technology.
The Covid law makes it possible to extend, during a transitional period, the debt threshold for the opening of a judicial liquidation from â¬ 10,000 for individual debts and â¬ 20,000 for global debts, to â¬ 50,000 (a single threshold).
With regard to meetings of creditors, the law provides for similar measures (to those taken with respect to general meetings) for meetings of creditors which are called, convened or convened during the interim period.
The Covid law allows an examiner of a business that is under review during the interim period to request an extended period of 50 days to report to the court under the company law.
Currently, an examiner has up to 70 days to present a report to the court and the Covid law allows this time to be extended by an additional 30 days upon request to the court. This amendment will mean a maximum review period of 150 days in exceptional circumstances (which the Covid law states to include, without limitation, the nature and impact of COVID-19 on the business).
Amendments to the law of 1893
The Covid Law also makes changes to the 1893 Law to provide more flexibility to registered companies when holding an AGM and general meetings of the company during the interim period (the same period as for companies under the law Covid). These modifications of the law of 1893 are very close to those made to the law on companies with regard to general meetings of companies.
Civil and Criminal Law (Miscellaneous Provisions) Act 2020
The Civil and Criminal Law (Miscellaneous Provisions) Act 2020 provides for remote meetings of state bodies where some or all of the members of that body are not in the same location and also provides for remote meetings unincorporated organizations (such as clubs and charities). organizations). The relevant provisions of this law were also introduced on August 21, 2020, initially for an interim period of three months but which was extended until November 9, 2021 by ministerial decree.3