Virtual Meetings – Austrian Act on Virtual Meetings

The COVID-19 Corporate Law Ordinance (abbreviated in German to "COVID-19-GesV") expires on 30 June 2023. Its purpose was to enable corporations to hold meetings virtually. After initially being enacted in 2020, it has since been extended several times, and yet another extension did not appear to be the most effective solution going forward.

Given that there is an obvious need for more permanent regulation in this area, the Act on Virtual Meetings (Virtuelle Gesellschafterversammlungen-Gesetz) seeks to create a permanent legal framework for the holding of virtual meetings. The draft law was in the consultation phase until 26 May 2023 and is due to come into force as soon as possible, on 14 July 2023 to be precise. This means that Austrian law will achieve parity with German law; a similar law entered into force in Germany back in mid-2022.

Among other things, the draft law gives corporations several options for holding their meetings in the future. In addition to still having the option of holding a meeting physically, in future there will also be the option of holding a simple virtual meeting, a moderated virtual meeting, or a hybrid meeting. The distinction between the simple virtual meeting and the moderated virtual meeting is that the moderated virtual meeting is held by a director and it does not require there to be a two-way connection. In most cases, this makes sense if the number of participants is unmanageable and a two-way connection would only be of limited practical value. Hybrid meetings allow participants to choose between participating in the meeting in person or virtually; in turn, where participants participate in the meeting virtually, this can take the form of either a simple virtual meeting or a moderated virtual meeting. To be able to hold a virtual meeting, the company's articles of association or by-laws must contain a provision permitting meetings to be held in this way. In this respect, the Act on Virtual Meetings differs from the arrangements provided for in the COVID-19 Corporate Law Ordinance in that the option to hold a virtual meeting will in future no longer exist ex lege, but instead provision must be explicitly made for it in the company's articles of association or in the by-laws. Consequently, it is especially important that the articles of association/by-laws are drawn up correctly. The relevant provision can either stipulate that meetings can be held virtually in the future or that the bodies of the company authorised to convene a meeting are given the authority to decide how the meeting is to be held. This does not prevent a meeting of the partners or shareholders from being held in person on a case-by-case basis. Any amendment of the articles of association or by-laws requires a three-quarters majority of the partners or shareholders, except where the articles of association or by-laws provide for a larger majority.

In principle, the very same provisions apply to listed stock corporations. In addition, the Act on Virtual Meetings contains a number of special provisions applicable to these companies, which are intended to facilitate low-threshold participation and the active participation of small investors.

In conclusion, the Act on Virtual Meetings is a step towards digitization in corporate law and one that is long overdue. It enables investors to participate actively and in an easier way. Furthermore, this law makes domestic companies somewhat more attractive to foreign investors, whose active participation in meetings in future will be – to use a popular expression – just a click way.