The virtual members‘ meeting of a German Verein (registered association)
The German COVID-19 Act allows German Vereine (registered associations) to hold virtual general meetings. Our article shows what to consider when using this option.
Usually the articles of association of a German Verein (registered association) stipulate that a members’ meeting must be held on an annual basis. According to prevailing opinion, the meeting has to take place in the form of a physical meeting. However, since mid-March, physical gatherings or events can be associated with difficulties and sometimes are not possible at all.
The German Act to reduce the effects of the COVID-19 pandemic in the civil, insolvency and criminal proceedings law – the COVID-19 Act – contains certain relaxations for meetings and resolutions of associations. Art 2 § 5 paragraph 2 of the Act authorizes the board of directors, even if the articles of association do not provide for such an authorization,
- to conduct a members’ meeting without the members being present at the place of the meeting and to enable the members to exercise their membership rights by means of electronic communication; or
- to allow the members to vote by means of postal vote, which means that the members may vote in writing before the members’ meeting is held..
Alternatively Section 32 paragraph 2 of the German Civil Code provides for a cast of vote by way of circulation if all members provide their consent to the resolution in writing. The COVID-19-Act again provides for a relaxation of the procedure. In deviation from from Section 32 paragraph 2 of the German Civil Code, currently a resolution may be taken by way of circulation if all members were involved, until the date set by the association at least half of the members provided their vote in writing and the resolution was taken with the required majority.
Because of the formal requirements, the postal vote as well as the vote by way of circulation do not seem to be practical. Therefore, this article will focus on the virtual members’ meeting. A virtual members’ meeting was so far only possible if the articles of association contained a respective authorization or if all members consented.
The COVID-19-Act only applies to meetings and resolutions in the year 2020, which means that virtual members meetings can only be conducted until 31st December 2020 where the articles of association do not provide for a respective authorization. The Act contains an option for extension until 31st December 2021.
But what does a board of directors have to observe specifically when planning and conducting a virtual members’ meeting?
1. Virtual platform
You have to choose a platform, which can facilitate real-time communication between the attendees and the chairman of the meeting. In order to minimize the risk of voidance a real-time picture and sound transmission is the safest option. Therefore, the board of directors should review the various conference software solutions available and determine which software is the most suitable for their association. The big providers for video conferences are ZOOM, Skype and Microsoft Teams. ZOOM and Skype also have the option to dial in by telephone. However, the association does not have to provide various possible communication options. Technical difficulties during a members’ meeting do not provide a reason for voiding any resolutions taken at the members’ meeting.
For the convocation of a virtual members’ meeting the rules stipulated in the articles of association continue to apply.
The Act does not provide for an exemption as concerns the place of the meeting when holding a virtual members’ meeting but the physical presence of the chairman at the place of the meetings suffices. Accordingly, the board of directors should verify where the chairman will be at the time of the meeting and make this location the place of the meeting.
Moreover, together with the invitation, the members should be provided with the details of the virtual members’ meeting, especially the dial in details and the personal password, if applicable. They should also receive information on the procedure of attendance and the exercise of their membership rights.
3. Exercise of membership rights, voting
Members have a right to participate in members’ meetings, as well as a right to speak, to be informed and to vote.
An effective exercise of membership rights is given where a real-time communication between the members as well as between the members and the chairman is possible. This is the case where a video conference is held in which members may ask questions or generally speak out. Where a bigger number of participants is involved, the board of directors may request that questions and speeches are provided in advance and are then considered within an appropriate schedule during the meeting. Alternatively, a right to speak may turn into a “right to write” if members can exchange via a chat.
The details for the count of votes prescribed by the articles of association also apply to the virtual members’ meeting. However, a count of vote by means of a show of hands to the camera will likely not be practical in very many cases. Especially with a big number of attendees and numerous counts of vote the use of a specific software may be advisable. The conference software ZOOM includes such a tool.
Especially with virtual members’ meetings the documentation should not be neglected. This is in particular the case where changes to the articles of association or to the members of the board of directors are resolved upon as this documentation has to be submitted to the responsible register. A list of participants as well as a protocol of the members’ meeting including the respective resolutions are necessary.
The conference software used should have the option to download a comprehensive list of attendance after the virtual members’ meeting. The list of attendance should list specifically who dialed in for how long. If a software for the count of vote is used, a list with the results of the casting of votes should be downloaded as well. Otherwise, the results of the voting have to be recorded manually in the protocol of the members’ meeting, which will later be signed by the board members as prescribed by the articles of association.
Via the conference software ZOOM you can download a list of attendees as well as the results of the casting of votes. When setting up the conference, one has to make sure that the respective boxes are ticked in order to be able to use these functions later on. We recommend that the board or the responsible employees test these functions in advance.
5. Resolutions of the board
The Act does not explicitly regulate a board of directors of an association or their meetings. Section 28 of the German Civil Code refers to sections 32 to 34 of the German Civil Code, which deal with the resolutions of the members when it comes to resolutions of a board of directors. Therefore, one could assume that the Act may also be applied to board resolutions. However, this is not uncontroversial. Nonetheless, if the board decides unanimously to hold their meetings virtually then the board of directors may convene virtual meetings beyond any doubt.