Changes in the functioning of companies, bondholders’ meetings, investment funds’ bodies and capital market
The amendment to the COVID-19 Act – commonly named Shield 2.0 – provides another change in the Commercial Partnerships and Companies Code concerning remote functioning of company bodies, which supplements provisions introduced by the COVID-19 Act to a material extent.
Remote secret voting
Pursuant to Shield 2.0, the supervisory board at the limited liability company or at the joint-stock company may pass resolutions following a written procedure or with use of means of direct distance communication also in the cases in which the company deed or the statute provides for secret voting. The supervisory board may pass a resolution following the above-said procedure provided that none of the supervisory board members objects to that. At same time, the company should ensure means of direct distance communication that will guarantee secrecy of supervisory board members’ voting.
The possibility to pass resolutions with use of means of direct distance communication (for example during election of a management board member, of the chairman of the supervisory board or on other matters for which secret voting is required in the company deed or statue) will facilitate companies’ operation also after the state of epidemic risk or the state of epidemic.
Electronic form subscriptions for shares
Provisions of Shield 2.0 introduce the possibility to subscribe for joint-stock company shares in the electronic form. The electronic subscription for shares involves filling-in a form provided in the telecommunications system and providing it with a qualified electronic signature or a safe (trusted) signature or with the personal signature, otherwise the subscription being invalid. Such a subscription does not have to contain signatures of the subscriber and the company or of another entity authorized to receive subscriptions and payments for shares. The receipt of a subscription needs, however, certification of the receiving entity.
Absence of electronic, trusted or personal signature or absence of all required data (number and kind of subscribed shares, amount of payments made for shares; subscriber’s consent for the wording of the statute if the subscriber is not the company’s shareholder, address of entity authorized to receive subscriptions and the payments for shares) results in invalidity of such subscriber’s declaration. The change introduced will facilitate the company’s’ process of share capital increase, including in the case in which the capital is acquired by means of the equity crowdfunding platform.
Participation in bondholders’ meetings by means of distance communication
Shield 2.0 enables remote operation of bondholders’ meeting with use of means of electronic communication unless the terms of the bond issue provide otherwise. The procedure of holding the bondholders’ meeting is determined by the person convening the meeting. The participation in a bondholders’ meeting with use of means of electronic communication involves, specifically:
- two-way real time communication of all participants of the bondholders’ meeting, at which they can speak during the bondholders’ meeting debate while at the same time staying at another location than that of the bondholders’ meeting debate
- exercising the voting right personally or by proxy before or during the bondholders’ meeting
The notice of convening the meeting should provide the information about the manner of participation in the bondholders’ meeting and the manner of voting with use of means of electronic communication. The requirements concerning the bondholders’ participation in the meeting should be limited to the bondholder identification and security of electronic communication. The list of bondholders taking vote with use of means of electronic communication should be attached to the minutes.
Possible changes regarding attachment of financial statement for the preceding business year in the bond purchase offer
Since the COVID-19 Act provides the possibility to extend the time-limit for preparing financial statements, it appears necessary – in the event of announcement the state of epidemic risk or the state of epidemic – that the possibility is introduced to extend the time-limit referred to in Art.35.3 of The Bond Act. If those changes have not been introduced, the time-limit for presenting the bond purchase offer would in fact become shortened (since, pursuant to Art.35.3 of The Bond Act, such presentation cannot be made later than 15 months following the balance-sheet date as of which the financial statement was prepared).
Distance functioning of investment fund bodies
Shield 2.0 enables investment fund participants’ distance participation in the fund bodies. The kind of bodies functioning at the investment fund depends on the kind of the investment fund. Open-end investment funds and specialized open-end investment funds have the meeting of participants. The meeting of investors may be established in closed-end investment funds. And the board of investors may be established in specialized open-end investment funds and closed-end investment funds.
The participation in the meeting of participants / meeting of investors / meeting of the board of investors (“Meeting”) is possible to be held with use of means of electronic communication, unless the fund statute provides otherwise. The person convening the Meeting decides on participation in the Meeting with use of means of electronic communication. The participation in the Meeting with use of means of electronic communication involves, specifically:
- two-way real time communication of all persons participating in the Meeting, at which they can speak during the Meeting debate, while at the same time staying at another location than that of the Meeting debate
- exercising the voting right personally or by proxy before or during the Meeting
The requirements concerning the participation in the Meeting should be limited to the identification of the participant/investor or the investor board member and to guaranteeing the security of electronic communication. The list of participants/investors taking vote with use of means of electronic communication should be attached to the minutes. The notice of convening the participants’ meeting should provide the information about the manner of participation in the participants’ meeting and the manner of voting with use of means of electronic communication.
Remote decision-making by the Financial Supervision Authority (KNF)
The amendments provide for extension of digitalization of the KNF activity. In addition to the possibility of remote participation in the meeting introduced on the basis of the COVID-19 Act, now it is possible to have administrative decisions and KNF decisions made in the form of an electronic document and to have them appended with the electronic qualified signature of the Authority Chairman or the Authority Deputy Chairman, also in other cases than those provided in the Code of Administrative Procedure.
Enabling the Securities Stock Exchange (GPW) to shorten the time-limit for amendments to the stock exchange regulations becoming effective
During the period of epidemic risk or epidemic, the company operating the regulated market (Giełda Papierów Wartościowych w Warszawie S.A.) made amendments to the regulated market regulations and other regulations set by the company being applicable to the market operated by it available to transaction participants at least 3 business days prior to the date at which the amendments became effective. Considering that - during the state of epidemic – the said time-limit becomes shortened significantly (from 2 weeks), it was provided that where needed from the perspective of the interest of the trade participants, KNF would have the right to set, by its decision, another time-limit, no longer however than 2 weeks.
Extension of the time-limit for preparation and first publication of the policy concerning engagement and other information
Shield 2.0 extended until July 2020 the time-limit for preparation and first publication of the policy concerning engagement or publication of the reasons for not having it prepared or published. The following duties are possible to be fulfilled until July 2020:
- the duty to publish for the first time the information referred to in Art.142c items 1 and 2 of the Act on Organization and Functioning of Retirement Funds
- the duty to provide for the first time the information referred to, respectively, in Art. 46f item 1 and Art.70bc item 1 of the Act on Investment Funds and Management of Alternative Investment Funds
- the duty to provide for the first time the information referred to in Art. 131q item 1 of the Act on Trading in Financial Instruments
- the duty to publish for the first time the information referred to in Art. 222d items 1 and 2 of the Act on Insurance and Reinsurance Activity
The duty to prepare and publish documents referred to above has been imposed on:
- employee retirement funds
- investment fund societies
- managers of alternative investment companies
- investment companies involved in managing portfolios
- insurance establishments and reinsurance companies
- respectively, allocating assets or making investments in companies shares admitted to trading on regulated market.
Since the epidemic has occurred, the extension of the time-limit for fulfilment of the above-mentioned duties should be found to be a positive solution since failure to fulfil them is subject to penalty.
Changes finally not entered in Shield 2.0
Unfortunately, Shield 2.0 does not provide for:
- admissibility of proxies in electronic form for participation in shareholders meetings of limited liability companies and general shareholders meetings of joint-stock companies (such proxies are now possible only at public companies)
- admissibility of having the minutes of the general meetings of shareholders prepared by notaries with use of means of electronic communication
Absence of the said changes does not facilitate use of the possibility of remote participation in companies’ general meetings of shareholders or shareholders meetings debates. We should hope the legislator will reconsider the need to adopt those solutions in the future.