Special rules regarding the general meeting of public companies during COVID-19 measure

Government Decree No. 102/2020. (IV. 10.) provides special rules regarding the general meetings of public companies derogating from the Civil Code. Such special rules apply if it is not possible to hold general meetings due to lockdowns, and the shareholders cannot make decisions in the course of general meetings.

The management may take decisions in issues falling in the competence of the general meeting.

The management may make decisions that usually fall in the competence of the general meeting. The management can:

• take decisions in matters indicated in the agenda of the general meeting, if the invitation has already been sent,
• decide on the acceptance of the annual balance sheets,
• decide on the use of the profit after tax,
• decide in matters that belong to the competence of the general meeting and are necessary in order to maintain the lawful operation of the company or to handle the current emergency situation, including any urgent decisions to be taken within reasonable and responsible management,
• amend the articles of association,
• alter from the proposals published in the agenda if the invitation to the general meeting has already been published.

If the management has been provided with authorisation to make decisions, such authorisation will be valid until the next general meeting to be held after the emergency period has lapsed, unless the management has already taken a decision in the subject matter of the authorisation.

Also, the management is entitled to decide on the payment of dividends.

The management shall decide on the acceptance of the company’s annual balance sheets until 30 April 2020 or until the end of the fourth month from the end of the financial year if the financial year does not correspond with the calendar year.

General meeting on the ex-post approval of the payment of dividend

The payment of the dividend may be subject to ex-post approval of the general meeting. If a general meeting is convened, the dividends may only be paid if the annual balance sheets and the decision on the payment of dividend are approved by the general meeting.

If, however the general meeting is not convened by the shareholders, the dividend may be paid and the following general meeting cannot longer deal with the decision on the annual balance sheet or the payment of dividends.

The general meeting can be convened if the following conditions are met:

• Shareholders entitled to convene the general meeting: only shareholders who are registered in the list of shareholders based on the identification procedure initiated in relation to the general meeting held in line with the original invitation or the publication made in accordance with the Decree, may convene the general meeting.
• Deadline for convening the general meeting: if the company’s financial year corresponds with the calendar year, the shareholders may convene the general meeting until 31 May 2020, while if it does not correspond with the calendar year, the general meeting can be convened within 30 days from the publication of the management decision. The request for general meeting shall be delivered to the company within the said deadline.
• Publication of the invitation: the invitation shall be published within 45 days from the end of the emergency period, or from the receipt of the request for the general meeting if in the meantime the emergency period has already ended.

Ex-post approval of other decisions made by the management

Shareholders representing 1 % of the votes may convene the general meeting in relation to the approval of management decisions made in other matters. The conditions for such general meeting are the followings:

Shareholders entitled to convene the general meeting: the same rules apply as above.

Deadline for the initiation of general meeting: such request shall be delivered within 30 days from the end of the emergency period.

Publication of the invitation: the invitation for the general meeting shall be published within 45 days from the receipt of the request.

The date of the general meeting

The general meeting may not be convened if there is less than 180 days between the end of the emergency period and 1 April of the following calendar year (or between the end of the emergency period and the end of the fourth month after the end of the financial year if the financial year does not correspond with the calendar year). In such case the management decisions may be subject to the following general meeting.

The mandate of members of company bodies and of the auditor

The mandate of all members in any company body or the mandate of the auditor shall continue until the next general meeting to be held after the end of the emergency period, if otherwise such mandate would terminate during the emergency period. These people shall continuously fulfil their duties until that date.

However, their mandate still terminates, if:

• the management takes the necessary decision under the emergency period and appoints new members or auditor, or
• the mandate of the member of the board of directors terminates because of dismissal, death, termination without succession, or if the capacity to act is limited and the limitation affects the performance of his duties, or in case of occurrence of any grounds for exclusion or conflict of interests.

The publication of the invitation and the proposals on the company’s website

If the invitation, the proposals, the reports of the supervisory bodies or the proposals for resolutions have not been published until 11 April 2020, these documents still have to be published on the company’s website even if the management will take the decisions.

The invitation shall be published 21 days prior to the date of the general meeting while the other documents shall be published 8 days prior to that date.

If however the invitation has already been published on the website before 11 April 2020, the new publication may deviate from that.

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