Covid-19 France: The Holding Of General Meetings Of Public Limited Companies (Sociétés Anonymes)

• Published date: 28 May 2020
• Author: Mr Hervé Letréguilly, Séverine De La Courtie and DAVID ST-ONGE
• Subject Matter: Corporate/Commercial Law, Coronavirus (COVID-19), Corporate and Company Law, Directors and Officers, Shareholders, Litigation, Contracts and Force Majeure, Operational Impacts and Strategy
• Law Firm: Shearman & Sterling LLP

We provide below an update of our previous alerts regarding the holding of general meetings of public limited companies (sociétés anonymes).

Holding of general meetings

As a reminder, a general meeting may be held behind closed doors if the meeting or its convocation (including the notice of meeting) occurs during a period of prohibition or limitation of collective gatherings (order No. 2020-418 of April 10, 2020). The measure previously in force (decree No. 2020-293 of March 25, 2020) ended on May 11, 2020.

A decree prescribing the general measures necessary to deal with the covid-19 epidemic in the context of the state of health emergency was published in the official journal of May 12. This text provides (our translation):

"Any gathering, meeting or activity for any purpose other than professional on public roads or in a public place, gathering more than ten people simultaneously, is prohibited throughout the territory of the Republic." (article 7)

"No event gathering more than 5,000 people can take place on the territory of the Republic until August 31, 2020." (article 8)

This text also provides for a set of restrictions ("barrier" measures, movement restrictions, bans with regard to conference centers and various rooms for accommodating the public).

This decree (No. 2020-548 of May 11, 2020) was published as soon as the emergency law was promulgated, which entered into force immediately (law No. 2020-546 of May 11, 2020, Official Journal of May 12). It repeals and replaces the "provisional" decree which had been published in the official journal of May 11, pending the promulgation of the emergency law which had been delayed (decree No. 2020-545 of May 11, 2020).

The main innovation lies in the limitation to the number of ten people (it was one hundred before), with a general "umbrella" ban for any event gathering more than 5,000 people.

The imprecise and ambiguous wording of Article 7, however, raises questions about its actual scope. It mentions in fact any " gathering, meeting or activity for any purpose other than professional on public roads or in a public place ". It differs on this point from previous texts: the decree of March 25 prohibited any gathering, meeting or activity gathering more than 100 people simultaneously, without other qualifications. Should it read "gathering, meeting ... for purposes other than professional in a public place", and, if so, does it include general meetings? It is difficult to determine with certainty whether the drafters of the decree intended to reduce the scope of the ban (by allowing "private" meetings) or extend it (by lowering the threshold to 10 people).

Faced with the many questions raised by issuers, the General Directorate of the Treasury updated on May 15 the FAQ that it had posted following the publication of the three orders on March 25. It specifies (our translation): "In particular, it may be concluded from the measures provided for by the decree No. 2020-548 of May 11, 20201 (in its version in force on the date hereof) that the condition for organizing a meeting "behind closed doors" is satisfied provided they are applicable to the place where the meeting is convened. This clarification provides useful comfort to issuers: it is therefore possible to hold a general meeting behind closed doors. However, the General Directorate of the Treasury does not specify which measures justify the meeting behind closed doors: prohibition (article 7) or limitations?

Analysis

We consider that a first reading, according to which "for purposes other than professional in a public place" would apply only to activities, should be put aside: it would result in prohibiting any meeting or gathering of more than ten people. Indeed, the emergency law of March 23, which authorizes the government to legislate by way of orders in the context of a health crisis, and which therefore sets the outline of...