The current state of danger has caused significant problems for businesses in the domestic economic environment. In the case of many companies, the source of the problem lies in the fact that their financial statements must also be reviewed by an additional body before being approved by the supreme body (thus, in the case of limited liability companies, by the members’ meeting) (e.g. supervisory board, board, etc.). However, the operation and founding documents of these companies were not prepared for the discussion of their financial statements to be carried out through electronic communication devices.
This problem was resolved during the state of danger by Government Decree No. 102/2020 (IV. 10.) on the different provisions applicable to the operation of legal persons and other organizations composed of persons and assets (“Decree”), the most important parts of which we summarize below.
Holding Meetings of the Supreme Body
Pursuant to the Decree, a meeting of the multi-member supreme body (e.g. members’ meeting, general meeting) may not be held with the personal participation of the members, even if it has already been convened.
Pursuant to the Decree, if the number of members of the company does not exceed five and quorum can be ensured in advance, decision-making must take place electronically.
Electronic solutions for holding meetings pursuant to the Decree
- the use of electronic communication devices, i.e. a conference general meeting or conference members’ meeting, or
- decision-making without holding a meeting, i.e. so-called remote voting,
which may be applied even if the founding document of the legal person does not provide for these options and their conditions.
Duties of Management in Connection with Electronic Solutions
Management must provide detailed information regarding the agenda and must also communicate the draft resolution to the members. In this context, it must determine:
- in the case of participation through electronic communication devices, the devices to be used and the method of verifying identity;
- in the case of decision-making without holding a meeting, one of the most important provisions is that at least 15 days must be provided for sending the votes.
Management is also responsible for preparing the minutes of the meeting of the supreme body, in which the circumstances of holding the meeting must also be recorded. The minutes must be signed by the executive officer chairing the meeting.
The Decree emphasizes that management is obliged — with the assistance of the electronic communication device available to it or another electronic device enabling personal identification — to do everything possible to ensure that the members receive the information and documents related to decision-making, and that they are informed of the decisions adopted.
The members of the supervisory board and the permanent auditor may be informed and may participate in the meeting of the decision-making body in the same manner as the members.
Board Membership
The Decree regulates an issue that arose in the life of many companies following the declaration of the state of danger in connection with the decision-making of bodies such as the board of directors, supervisory board, board, or audit committee. These bodies may also hold their meetings through electronic communication devices (e.g. telephone conference) or by using another electronic device enabling personal identification, or may conduct written consultations and adopt decisions relating to the management of the legal person in writing. In this case, written consultation and decision-making may also take place by electronic exchange of messages (e-mail).
If, during the state of danger, the number of members of the body falls below the number prescribed by law or by the founding document, or if a member is otherwise unable to act due to the human epidemic, the remaining members are entitled to adopt resolutions. This is an important safeguard to ensure that companies can remain operational even if the number of members of their management body decreases.
Method of Making Legal Statements
The Decree states that if the member is a legal person, it may make its legal statement electronically — in its capacity as a member — with a qualified electronic signature or an advanced electronic signature based on a qualified certificate, or, in the absence thereof, by authentication through the document authentication service linked to identification (AVDH).
A natural person member is not obliged to electronically sign their legal statement; however, the legal statement must contain the data necessary to identify the member.