COVID-19: Are purely virtual general meetings of cooperative societies also permitted?

Legal certainty only with explicit provision in the Rules.

The Act to Mitigate the Consequences of the COVID-19 pandemic in civil, insolvency and criminal procedure law (Federal Law Gazette I 2020, page 569 et seq.) contains considerable facilitating provisions for cooperative societies to maintain their activities, such as the shift of the adoption of the annual financial statements from the general meeting to the supervisory board, or the authorisation of the board of directors ‑ with the consent of the supervisory board to decide, at its due discretion ‑ on down payments on expected disbursements on a disputed credit balance or the expected dividend.

For the time being, the Act only applies to the current calendar year 2020. An extension of this provision until 31 December 2021 is principally possible by means of a statutory instrument. If the regulations prove to be successful, it cannot be ruled out at this point that the regulations will be permanently transferred to the German Cooperatives Act (Genossenschaftsgesetz) at a later date.

Even though we believe that the amendments are to be welcomed in principle, the wording of the Act and its explanatory memorandum raise the question whether purely online general meetings ‑ as for public limited companies – are actually permitted.

The new legal regulation provides for general meetings of cooperatives to be held without a regulation of the Rules and without personal attendance. To this intent, the Act amends section 43 (7) of the German Cooperatives Act to the effect that members' resolutions can also be passed in writing or electronically if this is not expressly outlined in the cooperatives' Rules. In this case the board must ensure that the minutes are accompanied by a list of members who have participated in the passing of resolutions in accordance with section 47 German Cooperatives Act. The method of voting must be noted for each member who participated in the passing of the resolution.

The last sentence of the regulation in particular allows the interpretation that the amendment is only intended for mixed general meetings or meetings of representatives, and that a purely virtual meeting should not be the subject of the regulation (as otherwise the note on the method of voting would be unnecessary). The explanatory memorandum can also be understood to imply this, since here ‑ unlike, for example, in the case of the public limited companies ‑ the term "virtual" is only used in quotation marks (BT-Drucks. 19/18110, p. 28).

It is true that the view has already been expressed in the literature on cooperative law that a purely virtual general or representative meeting can also be permitted with the adoption of resolutions in electronic form of section 43 (7) sentence of the Cooperatives Act. That would of course require a corresponding provision in the Rules.

The above mentioned new regulation can be interpreted in such a way that only in the case of mixed general meetings or meetings of representatives within the framework of the Corona legislation is it not necessary to have an explicit provision in the Rules and ‑ in other words ‑ there must still be a meeting with personal attendance at which at least individual members are physically present. Purely online general meetings therefore still require an explicit provision in the Rules in the interests of legal certainty.

It should also be considered that holding and organising digital general meetings and maybe even meetings of the board of directors and the supervisory board entail considerable technical organisational effort, which might not be provided that easily, and also not at short notice. As a result, there may be considerable legal uncertainty with regard to urgent resolutions to be passed. We will be pleased to advise you on this.

Benjamin Knorr

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