Lex COVID – special measures concerning legal persons
The declaration of emergency, closures of borders and related measures can make it impossible for some business corporations to hold meetings of their bodies, unless such situations have been envisaged in their memorandum of association. However, the chamber of deputies is about to discuss Lex COVID, a bill which, among other things, should address this situation.
According to the bill, each body of a legal entity could make decisions either using technical means (e.g. by videoconference) or in writing outside the meeting (per rollam), regardless of whether the memorandum of association permits, regulates or prohibits it. However, other requirements on per rollam decision-making laid down by law or by memorandum of association would still have to be respected and not be circumvented in this way. If the law or the company’s memorandum of association does not stipulate such decision-making requirements, the statutory body would determine them in case of the supreme body, in case of another body such another body. These requirements would have to be notified to the members of the body sufficiently in advance before such decision-making.
Furthermore, the bill regulates the expiration of the terms of office of an elected corporate body’s members, introducing a certain period of protection before the standard decision-making mechanisms of legal entities are able to operate again. If the term of office of an elected body’s member expires during the ongoing state of emergency, their term of office will automatically be extended by three months after the expiry of the emergency measures. The same should apply if the term of office expires within one month after the end of the emergency measures. Should the member expressly oppose the extension of the term of office, the term of office shall not be extended.
If an elected body maintains at least half of its members, then that body could elect/appoint substitute members for the period until the next meeting of the body competent to elect/appoint them, even if the memorandum of association does not permit so. If a company’s memorandum of association does not contain such a regulation, the adoption of such a decision would require the consent of all current members of the body.
If this draft bill is adopted, it can make some corporate operations during the state of emergency easier for companies that were not able to react in time by respectively modifying their memorandum of association or whose members may be abroad or for other reasons cannot physically participate in the meetings. At the same time, ambiguities in the law’s practical application should be expected.