A guest article by Tobias Mittrach and Jan Gerd Möller of PwC Legal

Until two years ago, the consensus was that Formal Meetings were held as face-to-face events. This had various cultural and legal reasons - among others, there was no clear legal basis for Formal Online Meetings (FOMs).

The Civil, Bankruptcy, and Criminal Procedure Mitigation Act ("Covid-19 Act") changed that. It created the legal basis for conducting FOMs such as meetings and assemblies even without separate statutory authority or rules of procedure. The special regulations were extended until August 31, 2022. This allowed companies and public authorities to gain sufficient experience with FOMs and learned to appreciate the advantages of digital formats.

In principle, committee work may continue to take place digitally even after the expiry of the COVID 19 Act. However, to be on the safe side legally, we recommend adapting the articles of incorporation accordingly. This is particularly important for committee work in supervisory boards, as special regulations apply here.

Legal requirements of digital supervisory board meetings

Right of objection
In principle, the Chairman of the Supervisory Board determines the form in which meetings are held. Supervisory Board chairpersons must check before each meeting whether a face-to-face meeting would not be opportune for the meeting in question.

The legislator also grants the members of the Supervisory Board a right of objection. This means that if only one member of the Supervisory Board objects to the digital format, the meeting must be held as a face-to-face event.

According to prevailing opinion, however, this right of objection can be excluded by the Articles of Association. We therefore recommend that the Articles of Association be amended accordingly to create legal certainty for digital Supervisory Board meetings.

Voting and elections
According to a ruling by the Higher Regional Court of Frankfurt, voting by e-mail is permissible in principle. The problem, however, is that a simple e-mail offers no guarantee of the identity of the sender or its authenticity.

We therefore recommend that the use of qualified digital signatures be stipulated in the Articles of Incorporation. A software solution for formal online meetings should also support qualified digital signatures.

Software and technology
The Chairman of the Supervisory Board, in consultation with the Executive Board and the Management Board, is responsible for creating the technical prerequisites. This also includes ensuring data privacy and confidentiality.

Secret ballots
The execution of secret ballots must also be guaranteed for digital and hybrid formats. We therefore recommend paying attention to this feature when selecting software.

Meeting fees
This is controversial and should therefore also be regulated in the Articles of Association. In general, the term "meeting" is used as a generic generic term for all forms of meetings. The principle of equal treatment between Supervisory Board members must still be observed.

Governance requirements
In addition to legal requirements, FOM organizers must also comply with governance guidelines. Governance refers to the regulatory framework for managing and monitoring a company. While this goes hand in hand with legal requirements, it has a different focus.

Governance is currently undergoing a transformation: On the one hand, new legal regulations are being created - for example with regard to digital meeting formats - on the other hand, there are also new market requirements.

Governance requirements for supervisory boards are also stricter today. Whereas supervisory board meetings used to be more like discussion sessions, greater attention is now paid to ensuring that supervisory boards fulfill - and can fulfill - their monitoring function.

The trend is towards stricter governance guidelines, for example with regard to sustainability or data protection. The FOM software must meet this trend. For example, the software must ensure that trade secrets are protected. This requires certain technical prerequisites such as DSGVO-compliant data storage and tools for secret ballots.

In addition to the technical requirements, employees must also be trained in their behavior. In a non-public FOM, for example, no third party may listen in in the background.

Our recommendation
Our general recommendation is to regulate all the fine points listed here in the articles of association and management, thus creating legal certainty.

In this context, we recommend that a clear distinction be made between voting at meetings, by circular resolution and outside meetings in order to avoid the risk of rescission and nullity when resolutions are adopted.

In addition, standardization of these processes is important. Companies should already establish systems that they can use for years from a legal and technical perspective.