New BGB regulations on hybrid or purely virtual assemblies and meetings - for associations and foundations "by means of electronic communication" for associations and foundations "by means of electronic communication"
Background and legislative history
Even during the coronavirus pandemic, the federal legislator created special statutory regulations to provide associations and foundations that previously had no statutory regulations for assemblies and meetings "by means of electronic communication" with a legal basis, at least during this time, so that assemblies and other bodies could also be held and effective resolutions passed in full or in part in digital or electronic mode. Without a legal basis for this, which did not exist at the time, the corresponding articles of association or the consent of all (association or body) members were or are necessary as a prerequisite for effectiveness. Even back then, there were discussions about including permanent legal regulations on this in the BGB. However, the aforementioned coronavirus regulations, which were issued for a limited period of time and then finally expired on September 1, 2022 after being extended several times, did not initially receive a legal successor in time. This resulted in a period of time in which there was no legal basis for this, at least initially.
On February 9, 2023, the German Bundestag (finally) passed a new version of Section 32 (2) BGB with the "Act to Enable Hybrid and Virtual General Meetings in Association Law" of March 14, 2023. The draft version that was finally passed as law was finalized the day before with the recommendation of the Bundestag's Legal Affairs Committee on 8 February 2023 (BT-Drs. 20/5585). In its meeting on 03.03.2023, the Bundesrat decided not to call on the Mediation Committee and therefore also allowed this amendment to the BGB to pass. The law was then promulgated in the Federal Law Gazette on 20.03.2023 (BGBl. 2023 I No. 72 of 20.03.2023) and entered into force on 21.03.2023.
What provisions does Section 32 (2) BGB new version contain?
With its new Section 32 (2), the BGB contains the following provisions - expressly regulated there for general meetings of associations - which should now permanently enable hybrid and purely virtual meetings without a corresponding basis in the articles of association:
"When convening the meeting, provision may be made for members to be able to participate in the meeting and exercise other membership rights by means of electronic communication even without being present at the meeting venue (hybrid meeting). The members may decide that future meetings may also be convened as virtual meetings, in which members must participate by means of electronic communication without being present at the meeting venue and exercise their other membership rights. If a hybrid or virtual meeting is convened, the convocation must also specify how members can exercise their rights by means of electronic communication."
Does this also apply to (board) meetings? Are these options also permitted for foundation bodies?
By reference to Section 28 BGB, the same applies to board meetings of associations as to their general meetings. This means that the new provisions of section 32 para. 2 BGB (new version) also apply to board meetings.
In the case of the foundation's board of directors, the applicability of Section 32 (2) BGB (new version) results from the reference in Sections 86 and 28 BGB. From the entry into force of the foundation (civil) law reform on 01.07.2023, this will follow explicitly for all foundation bodies from Section 84b sentence 1 BGB new version.
Which modes of meetings and assemblies are possible under section 32 para. 2 BGB (new version) in addition to the presence form, even without a provision in the articles of association?
According to these new statutory provisions, the body responsible for convening (general) meetings or (management board or other body) meetings can easily choose whether to convene a meeting in person or in hybrid form. In the case of an authorization pursuant to Section 37 (2) BGB to convene a general meeting of the association, this also applies to the person authorized to do so by the court. If a general meeting or a meeting of an association or foundation body is convened and held in hybrid form, the members of the association or body have the (own) choice of whether they participate in person or "by means of electronic communication".
If, on the basis of the new legal regulation and without a corresponding provision in the articles of association or a unanimous resolution of the respective members, the person responsible for convening the meeting is to be able to choose the purely virtual mode, i.e. "without being present at the meeting venue by means of electronic communication", either exclusively or as an option, a corresponding resolution is required beforehand. The reason for this is that, as an alternative to the purely virtual mode, there is then no possibility of participating in person and exercising (membership) rights, but only by the electronic means specified when the meeting is convened. With regard to the general meeting of the association, the members of the association concerned can decide that a purely virtual meeting should be held. For other association or foundation bodies, their members are in turn responsible for this. The advantage of this new legal regulation is that it is not necessary to amend the articles of association, which involves a certain amount of effort. Instead, a simple resolution is sufficient on the basis of this new legal regulation. Like all resolutions, this must be documented. The resolution can cover individual or all future meetings or sessions and can also be revoked for the future by another such resolution (see BT-Drs. 20/5585, p. 11).
In the case of both hybrid and purely virtual meetings or (board) meetings, it must be stated when they are convened "by which specific means of electronic communication" (BT-Drs. 20/5585, p. 11) electronic participation and (member or board) rights can be exercised. This requires the convening notice to state which specific means of electronic communication - see below - is intended. This is intended to enable those invited "to check in good time in advance whether [...] the technical requirements for the use of the electronic means of communication specified in the invitation [...] are available or whether further precautionsneed to be taken" (see BT-Drs. 20/5585, p. 11).
What specific options for implementing hybrid or purely virtual formats are covered by the phrase "by means of electronic communication"?
This wording was deliberately chosen broadly by the legislator. In the course of the legislative process, it was broadened to include video conferencing alone, after it had been narrowed down in earlier drafts. The legislator wanted this to be understood as "by means of any suitable electronic communication" (BT-Drs. 20/5585, p. 2, 10 and 11). In addition to video conferencing, this refers in particular to telephone conferences, chat or voting by email (as expressly stated in BT-Drs. 20/5585, p. 10 and 11).
Can the possibility of digital assemblies and meetings also be excluded or modified in whole or in part?
This is certainly possible, as the law does not necessarily have to be adopted 1:1. For general meetings of associations and their board meetings, this results from Section 40 BGB. For foundation bodies, this is also expressly provided for in Section 84b sentence 1 BGB (new version), which will apply from 01.07.2023.
However, theprerequisite for a partial or complete exclusion of the possibilities created by section 32 para. 2 BGB (new version) - or their modification - is a corresponding provision in the articles of association, which may first have to be included or adapted by an amendment to the articles of association to this effect. Like all amendments to the articles of association, these also only become effective - unless further requirements are stipulated in the individual case - for registered associations upon their entry in the register of associations, and for foundations with legal capacity upon their approval by the competent foundation authority.
What has not (yet) been regulated by law with Section 32 (2) BGB (new version)? What legal consequences or legal necessities could therefore arise in each case?
Essentially, it is likely to be these two aspects:
The facilitations for circular resolutions outside of (general) meetings and (board or other organ) meetings, which were contained in the corona-related special regulations but have been repealed since 01.09.2022, have not been re-legislated by this new legal regulation. Section 32 para. 3 BGB new version - the previous section 32 para. 2 BGB - therefore continues to apply, or has already applied since 01.09.2022, that circular resolutions outside of assemblies and (board) meetings are only effective in writing and only if all (association or organ) members agree to the motion. If something else is desired, this can be made possible by the articles of association. This may also require an amendment to the articles of association. Essentially, it will probably be necessary to regulate that the possibility of a circular resolution also exists in electronic form and/or that not all members, but only a (possibly qualified) majority must approve the content of the motion.
In addition, the law only allows the options of Section 32 para. 2 BGB (new version) from its entry into force on 21.03.2023. This follows from the fact that no retroactive effect of the entry into force was regulated in this law. Meetings or meetings and their resolutions that have been held or adopted in hybrid or purely virtual form since 01.09.2022 without a corresponding provision in the articles of association (or without the unanimous consent of the respective members to the mode chosen in the individual case) are and therefore remain invalid. These must or can be repeated if necessary, but only with effect for the future. To this end, resolutions can now also be passed in hybrid or purely virtual form on the basis of Section 32 (2) BGB (new version).
With these statutory provisions, are articles of association no longer required for this?
If an association or foundation wishes to exclude the possibilities of this new law in whole or in part, a corresponding provision in the articles of association is required. This requires an amendment to the articles of association, as there are generally no provisions on this in an existing association or foundation's articles of association.
In addition, if an association or foundation wishes to permit and use digital or electronic formats in addition to physical formats, it may also make sense to create its own provisions in the articles of association despite the new statutory provisions of Section 32 (2) BGB (new version). In this way, the foundation's own autonomy is actually exercised at the same time. In addition, this is the best way to create clear regulations for your own organization that take precedence over the law. Last but not least, this can also counteract the deficits in facilitating circular resolutions described above, which the new version of section 32 para. 2 BGB does not remedy and for which separate provisions in the articles of association are still necessary.
For these reasons, digital or electronic formats for meetings and assemblies as well as simplified regulations for circular resolutions should also be considered and then, if necessary, specifically regulated in the articles of association if amendments or even new versions of articles of association are pending for associations and foundations anyway. In the case of newly founded companies, these aspects can and should also be considered when drafting the articles of association, i.e. from the outset.