D.he possibility of holding general meetings exclusively on the internet in 2021 ensures ongoing discussions. “Shareholder rights are massively restricted in this format,” said Ingo Speich, Head of Sustainability & Corporate Governance at Deka Investment in an interview with F.A.Z. Speicher is well known to many shareholders as a speaker at general meetings on behalf of shareholders. In 2019, Speich moved from the fund company Union Investment to Deka.
In the course of the corona pandemic, the German legislature cleared the way for online general meetings in spring 2020 after face-to-face events were no longer an option. Countries such as Switzerland and Spain had previously created the opportunity for this. At shareholder meetings in Germany, there are usually several hundred, and in the case of large DAX stocks such as Bayer, Deutsche Telekom or Deutsche Bank, often thousands of shareholders come together. The law had to be changed because stock corporation law only provided for face-to-face events.
No dividend without a general meeting
For many companies, simply postponing the shareholders’ meeting was not an option. Personal-Financial.com measures require a resolution by the shareholders as well as the appropriation of profits. The distribution of the dividend also depends on the latter – if there is to be one. The amended law was initially limited to 2020. It has now been extended for the entire year 2021 and ends on December 31 of the coming year. Since the publication of the relevant ordinance in the Federal Law Gazette last week, companies now have planning security for the coming annual general meeting season (F.A.Z. of October 29).
For Ingo Speich from Deka, the annual general meeting is the central event in a company’s annual calendar. The debate on corporate development takes place there. In the virtual general meeting, questions must be submitted up to two days before the date. A fact that Speich does not approve of, because it makes spontaneous inquiries impossible.
“In view of the feared submission of a large number of virtual questions at the last minute in the pandemic situation, the deadline was set for the companies,” says Hartwin Bungert, partner at the law firm Hengeler Mueller. Companies could prepare appropriately in this way. In the virtual general meeting practice 2020, the companies would have made an effort throughout the bank to answer the questions completely – and thus “demand-free”. It should actually be considered whether a model could be installed in the future in which more interaction between the management board on the one hand and shareholders on the other is possible.
Contestation is a big issue
However, this topic is more complex than it appears at first glance. “The pivotal point here is the challenge,” says Bungert. Every company fears this, because with successful actions for annulment, every general meeting can become invalid. In order to relieve companies of these worries, the possibility of contesting questions that were not (fully) answered in the virtual general meeting was suspended in the course of the corona legislation.
“It can’t stay that way,” says Speich from Deka Investment. Shareholders would have to regain the possibility of avoidance. Overall, Speich thinks that companies “have to move more”. Some companies had published the CEO’s speech in advance, but that was only a minority. “It should become the rule.” In addition, it would be welcomed if the questions submitted by shareholders were made public in advance and further questions could be asked at the general meeting.
The regulation, which has now been extended until the end of 2021, says nothing about how things will continue in 2022. In theory, it would then have to be switched to the old attendance method. “We urgently need reforms,” says Speich. He envisions hybrid events in which shareholders can choose between virtual and on-site events. Stock corporation lawyer Bungert also sees this future trend. The prerequisite for this, however, is a reasonably plannable effort for the company – and thus no double effort – as well as the fair regulation of the shareholders’ rights to question and contest, if additional virtual questions are allowed during the face-to-face meeting.
With a few exceptions, the 2020 annual general meeting season is essentially over. In the new year, however, the next shareholders’ meetings are already scheduled, for example Thyssen-Krupp at the end of January or Siemens at the beginning of February 2021.