Organising shareholder meetings remotely

Under the Law on Companies, a limited liability company may allow shareholders to attend the general meeting of shareholders and to vote by means of electronic communications. Although no official changes in legislation have yet been implemented in this field, on 7 April 2020 the Ministry of Economy and Innovation published a recommendation to organise meetings of participants of shareholders during the quarantine period remotely and create an environment where decisions on urgent issues (i.e. those for which decisions are required by law within set time limits) would be adopted by voting in writing or by attending a meeting via electronic communication and following these guidelines:

  • inform participants as early as possible about the planned meeting and provide access to relevant documents;
  • be prepared to provide information by telephone, e-mail, publication on the legal entity’s website, etc.;
  • provide voting ballots containing all relevant information, if voting in writing is envisaged;
  • ensure proper identification of participants at the meeting and create an environment for full participation in real time (e.g., to inform participants about the program and devices to be used for the videoconference, time of the videoconference, connection links, codes and other relevant information), if the meeting is organised remotely.

In turn, even though the Centre of Registers and notaries provides services during the quarantine period, physical customer services are still limited. However, some actions, can be carried out electronically such as establishing legal entity, amending the articles of association or transferring shares in private limited liability companies. Read more on this topic here.

Financial reporting is more flexible during quarantine

Under the Law on Companies, annual financial statements of limited liability companies must be approved by shareholders no later than within four months from the end of the company’s financial year and filed with the Register of Legal Entities no later than within 30 days from approval (e.g., if the financial year of an entity corresponds to the calendar year, its annual financial statements should be approved no later than by the end of April and filed no later than by the end of May). Timely submission of annual financial statements is significant not only for ensuring business transparency in general, but it is also one of the conditions for companies seeking state aid and for those participating in public procurement.

Since under quarantine conditions some legal entities may face difficulties in approving and submitting financial statements for 2019, the Centre of Registers has announced that this year financial reporting will be assessed flexibly and taking into account objective reasons which may prevent businesses and organizations from timely reporting, late financial reports will be accepted as well. The plan is that during this period, the Centre of Registers will not apply sanctions set by laws: it will not start drawing up protocols of administrative offences and will not initiate procedures for revoking the status of a beneficiary.