Since March 22, this year, the Saeima of the Republic of Latvia has urgently approved amendments to the Commercial Law that allow members (shareholders) of capital companies to participate remotely in members’ meetings and vote. These changes are also intended to facilitate the holding of meetings of the board of directors and members of the board of capital companies.
In addition, the amendments provide for the introduction of a regulatory framework that will allow the organization of annual meetings of members (shareholders) by electronic means, subject to regulatory requirements for the approval of annual reports, regardless of the restrictions currently set for holding meetings.
What did the Saeima offer to merchants?
Possibility to remotely participate in meetings of members (shareholders)
Commercial Law required members and shareholders to attend the meeting in person or through an intermediary. However, there was no clear regulation as to whether members could attend the meeting remotely (e.g. via video conference). The absence of such a regulation prohibited capital companies in particular from inviting members to attend meetings by electronic means.
Now the situation has changed, and the amendments adopted by the Saeima give merchants and holders of shares (stocks) several opportunities to organize remote meetings of the members (shareholders):
1) the right of a member to vote before the meeting;
2) the right of a member to participate and vote in the meeting of members by electronic means;
3) organization of e-meetings.
In all these cases, it is considered that the member attends the meeting in person and is included in the attendance list, and the vote cast by the member is counted in the voting, as is the votes of the physically present members.
Member’s right to vote before the meeting
The new regulation allows the member to cast his or her vote before the meeting itself. This right shall be granted to each and every member of the capital company regardless of the number of votes he or she holds. In order to use this right, it is not necessary to state it in the articles of association, and the member should not ask for it to be granted. The notice of convening the meeting should include information on the opportunity to vote on the agenda prior to the meeting and the manner in which the member may use this right (identification requirements, address to which the vote is to be sent, etc.).
In addition, the member should provide an opportunity for the company to identify him or her, for example, to notarize his or her signature below the vote certification or by electronic signature. However, the company may introduce another remote identification procedure of members. The member must also ensure that the company receives his or her vote at least one day before the meeting. For example, a member together with a vote may send a request to the company to confirm receipt of the vote. In the event that the vote was not received or approved, the member may attend the meeting and vote by electronic means.
Members’ e-meeting and member’s right to participate and vote in the meeting electronically
The new regulation allows members’ meetings to be held remotely, in part or in full. At the same time, the law distinguishes between meetings held entirely by electronic means (e-meetings) and those held in person, where members have the right to use their rights electronically.
E-meetings exclude the right of a member to attend a meeting in person and, in essence, require the member to attend and vote at the meeting by electronic means. A capital company may hold such a meeting only if that form is prescribed by the articles of association of the company.
At the same time, the right of a member to attend and vote at a meeting by electronic means implies that the meeting is held in person and that the member is given the opportunity of remote participation and voting. Of course, in this case, the venue of the meeting and the time at which the members can come and use their rights are determined. At the same time, members shall have a remote access the meeting by electronic means. In this case, some or all of the members attend the meeting remotely, but it is their (members’) free choice: to attend the meeting in person or remotely.
Attendance of meetings by electronic means shall not prejudice any other rights of the members, such as the right to speak, to ask a question or to appeal a decision taken in accordance with the law.