- The questions currently being raised in the SAS
- Is it mandatory to convene the general meeting for the approval of the accounts and the allocation of the profit for the financial year just ended?
- If holding a general meeting (in the sense of "meeting") is mandatory, is it possible to use a video conferencing system or other remote communication methods to comply with lockdown rules?
- If holding a general meeting (in the sense of "meeting") is mandatory, within what timeframe must the president or the competent collegial body of the SAS convene the AGM?
- Emergency measures to help companies
The questions currently being raised in the SAS
Is it mandatory to convene the general meeting for the approval of the accounts and the allocation of the profit for the financial year just ended?
The legal obligation
The decision to approve the annual accounts and to allocate profits must be taken collectively by the partners under the conditions provided for in the articles of association (C. com. art. L 227-9, para. 2).
Depending on how the articles of association are worded, two options are possible:
1. It is possible to use a private agreement summarizing all the decisions unanimously adopted by the partners. The lockdown period should therefore not pose any difficulties.
2. The organization of a formal meeting, either in person or virtually, during which all partners can express their views and vote on the proposed resolutions. The lockdown period may make holding the Annual General Meeting (AGM) complicated, or even impossible (especially if the amendment itself requires a meeting).
If holding a general meeting (in the sense of "meeting") is mandatory, is it possible to use a video conferencing system or other remote communication methods to comply with lockdown rules?
The legal obligation
Comply with the procedures for holding the AGM stipulated in the articles of association (Commercial Code art. L 227-9, para. 2.).
If the use of videoconferencing or other means of communication (telephone, etc.) is possible: the AGM can be held during the lockdown period, subject to the following two conditions:
- to be able to convene it according to the procedures laid down in the statutes and;
- to be able to respect the statutory forms, while ensuring the legal security of the AGOA (which involves the possibility of verifying the identity of the partner participating and voting at the AGOA).
If the statutes do not provide for these methods of communication, the holding of the AGM will have to wait until the end of the lockdown, unless the statutes are amended (which also requires compliance with a certain formality).
Only SAS companies in which statutory modification by a private agreement with the unanimous consent of the partners is possible will be able to circumvent the obstacle of confinement.
If holding a general meeting (in the sense of "meeting") is mandatory, within what timeframe must the president or the competent collegial body of the SAS convene the AGM?
The legal obligation
In single-member SAS companies: the standard period of 6 months from the end of the financial year must be respected (Commercial Code art. L 227-9, para. 3.).
In multi-member SAS companies: No deadline is set for the presentation of accounts and the allocation of profit.
The statutes may stipulate compliance with a deadline, such as the classic 6-month period from the end of the financial year.
Practical limitations
The payment of dividends whose distribution is decided at the AGM must take place within 9 months of the end of the financial year.
Note: If the 6-month period is included in the articles of association, it is still possible, in order to gain flexibility, to decide, by a private agreement reflecting the unanimous agreement of the partners, to amend the articles of association (provided that such a provision is included in said articles of association).
Emergency measures to help companies
The emergency law to deal with the Covid-19 epidemic of March 22, 2020 provided dedicated measures to address the difficulties related to holding general meetings and meetings of deliberative bodies, as well as the rules for approving and publishing annual accounts, during this period of crisis and confinement (Article 7 of the law).
“(...), the Government is authorized to take by decree, within three months of the publication of this law, any measure which may enter into force, if necessary, from March 12, 2020:
(f) Simplifying and adapting the conditions under which the assemblies and collegial governing bodies of private legal persons and other entities meet and deliberate , as well as the rules relating to general meetings;
(g) Simplifying, clarifying and adapting the rules relating to the preparation, closing, auditing, review, approval and publication of accounts and other documents that private legal entities and other entities are required to file or publish, in particular those relating to time limits, as well as adapting the rules relating to the allocation of profits and the payment of dividends ;”
Objective #1
Adapting the applicable rules for holding general meetings to take into account the travel and gathering restrictions that prevent these meetings and bodies from being held.
The explanatory memorandum suggests that the adaptations will relate to the rules "relating to the convening, information, deliberation and holding of these assemblies and bodies as well as to the information, participation and voting of their members.
Objective #2
Addressing the impact of travel and gathering restrictions on the activities of accountants and auditors, particularly on:
i) the processes of capturing, retrieving and consolidating accounting data from companies and;
ii) the conduct of their statutory audit missions of accounts
In particular, it aims to prevent delays in deadlines and difficulties in the procedures for finalizing and approving accounts from potentially impacting decisions regarding profit allocation and dividend payments in the event of postponements of meetings of the corporate bodies responsible for deciding on these decisions
Only the ordinances will be able to provide us with details on the adaptations put in place.
