During the pandemic, general meetings with thousands of people were not possible for understandable reasons. The online format is now legally anchored.
Cake throwing and loud protest – the annual general meeting of the car manufacturer Volkswagen reminded of the best times of such events. Road blockades on access roads, climate protests in front of the assembly building, disruptive actions in the hall. Alone: It is no longer necessarily the rule that managers present themselves to thousands of shareholders. Even after Corona – to the annoyance of many shareholders – a number of companies in Germany are holding their general meetings exclusively online: this Wednesday (10 a.m.) Commerzbank.
What is the legal situation?
During the corona pandemic, the legislature created the possibility of holding general meetings purely digitally. In this way, these annual meetings could take place on a secure legal basis even in times of contact restrictions. At the end of April 2020, the pharmaceutical giant Bayer was the first Dax group to move its entire annual general meeting to the Internet. Since July 2022, the special corona regulation of a virtual general meeting has been a permanent feature by law.
Are there requirements for online general meetings?
For future shareholder meetings in this format, an amendment to the Articles of Association of the respective stock corporation is required. This means that the management must obtain approval from its shareholders to be able to hold general meetings without the physical presence of shareholders beyond 2023. It must be ensured that such a general meeting is broadcast in its entirety in image and sound. In contrast to the pandemic provisional, the law passed last year also strengthens shareholder rights: for example, through the possibility of speaking without prior notice.
Do shareholders also see their rights strengthened?
On the contrary. In the digital format, the shareholder remains “onlooker”, criticizes Markus Kienle from the Protection Association of Investors (SdK), the general meeting becomes “board television”. Fund manager Alexandra Annecke from Union Investment demanded at least a mixture of presence and online from Deutsche Bank: “You should be able to answer shareholders’ questions personally and publicly at least once a year, face direct criticism and feel the atmosphere in the hall.”
The German Protection Association for Securities Ownership (DSW) has repeatedly expressed criticism: “We are not fundamentally against the virtual general meeting – in clearly justified exceptional situations,” affirmed DSW CEO Marc Tüngler in March. “However, perfect technical implementation is an essential prerequisite.”
The head of Deutsches Aktieninstitut, Christine Bortenlänger, says that in view of an increasingly digital world, “the introduction of a virtual general meeting is only logical”: “I can’t see any limited influence.”
Why are general meetings actually important?
The Annual General Meeting – HV for short – is the most important decision-making body of a stock corporation alongside the Management Board and Supervisory Board. Once a year, shareholders have the opportunity to express their opinion personally to the management of their company. In addition, the general meeting makes important decisions: the shareholders vote, among other things, on the distribution of the dividend, possible capital increases or elections to the supervisory board.
What are the advantages?
In the legislative process in July 2022, the Federal Ministry of Justice argued, among other things, that the possibility of collecting questions in advance had “contributed to an increase in the quality of the answers to shareholder questions”. In addition, proponents see it as an advantage that shareholders who would not be able to attend a face-to-face event can take part via connection. “A clear advantage of the virtual format is that shareholders can participate more easily and exercise their rights more easily. This is particularly attractive for young and working people,” says Bortenlänger, head of the Aktieninstitut. At its virtual general meeting in 2023, Deutsche Börse recorded a record in its history with almost 79 percent of the voting capital.
Another argument from the company’s point of view: lower costs. One can “ultimately assume cost savings of around 40 percent in virtual format,” said Deutsche Bank board member Stefan Simon at this year’s online general meeting of Germany’s largest financial institution. According to Simon, the costs for this year’s event amounted to “approximately three million euros”, the online general meeting in 2022 cost Deutsche Bank 2.83 million euros, at the last general meeting of the Dax group in 2019 it was been 4.6 million euros.
How many companies have chosen the virtual format?
In a preliminary evaluation based on the AGM dates that are already known, the DSW shareholders’ association came up with the following figures: Of the 40 companies in the German share index, 28 chose the virtual format in the current AGM season, 12 invited their shareholders to a face-to-face meeting. In the MDax, the distribution was almost 50:50 (20 virtual, 24 in person). To date, DSW has held 25 virtual general meetings and 39 in person in the SDax.
Source: Stern
