Virtual shareholder meetings: are they legally valid?

Shareholder meetings held via Zoom or Microsoft Teams are no longer an exception. They’ve become the new corporate standard. However, many companies have yet to verify whether such meetings are legally valid in their jurisdiction and properly reflected in their articles of association. Even one overlooked detail can result in corporate decisions being declared invalid. Courts are already handling cases where online votes are challenged due to lack of quorum or procedural breaches in participant verification. In this article, we’ll examine how to establish the right to hold virtual meetings legally, what requirements apply to their execution, and what specific language should be used in the articles of association.

What is a virtual shareholders' meeting: forms and differences

Virtual shareholder meetings are a form of corporate governance where participants interact remotely, without being physically present in the same location. This format has become especially relevant in recent years, initially as a response to the pandemic, and later as part of the broader trend toward sustainable digital transformation. However, it's important to note that not all forms of online participation are legally equivalent.

Virtual, remote, and hybrid formats

Modern companies rely on several approaches to conduct shareholder meetings:

1. Fully virtual meetings. All participants attend online, and decisions are made through a video conferencing platform or specialized corporate software. Examples: Zoom, Microsoft Teams, or dedicated e-voting portals.
2. Hybrid meetings. Some shareholders attend in person, while others join remotely. It is crucial to ensure equal participation and voting rights for all attendees. This format is often required in jurisdictions where fully virtual meetings are only permitted if a hybrid alternative is available.
3. Asynchronous voting. Decisions are adopted without live video sessions, using online surveys or corporate voting platforms. This method is not universally accepted, as it may conflict with the legal principle of "simultaneous participation" in some jurisdictions.

How a virtual meeting is conducted

To be considered legally valid, a virtual meeting must meet a set of technical and procedural criteria:

1. A reliable system for verifying participant identity (e.g., electronic signature, access codes, or real-time authentication);
2. Real-time access to the agenda, discussion, and voting tools for all participants;
3. Accurate recording of quorum and votes, with the ability to audit or verify results;
4. Protection of confidential information and legally binding documentation of resolutions (e.g., board minutes drafted in compliance with applicable corporate law).

Important! In many countries, these requirements are codified in legislation or official corporate governance guidelines, such as the UK’s GC100 Guidance, the SEC Rules in the United States, or DGCL §211 (Delaware General Corporation Law).

Legal admissibility of virtual meetings: international practice

The legal framework governing virtual shareholder meetings varies significantly across jurisdictions. In some countries, virtual or hybrid formats are explicitly permitted by law, while in others they are allowed only if expressly provided for in the company’s articles of association.

European Union and the United Kingdom

Directive (EU) 2017/1132 leaves the format of general meetings to the discretion of national legislation and company statutes. In many EU member states, fully virtual meetings are permitted only if explicitly authorized in the articles of association.

In Germany, the GesRuaCOVBekG law adopted in 2020 temporarily allowed fully virtual meetings. As of 2023, a new law permits permanent virtual meetings — but only if specific provisions are included in the company’s articles and certain conditions are met.

In France, virtual meetings are allowed only if explicitly mentioned in the articles of association. The rules are set out in the Code de commerce, particularly Articles L225-103-1 and D225-1-2.

In the UK, under Section 360A of the Companies Act 2006, companies may hold virtual meetings if this is permitted by their articles of association. Temporary COVID-19 relief measures (under the Corporate Insolvency and Governance Act 2020) have since expired, reinstating the importance of properly drafted constitutional provisions.

United States and Canada

Most U.S. states allow both virtual and hybrid shareholder meetings. In Delaware, for instance, the Delaware General Corporation Law (DGCL) governs the process. Section 211 of the DGCL permits fully virtual meetings provided the board of directors adopts procedures that ensure participant identification, voting, and proper recordkeeping.

In Canada, the Canada Business Corporations Act (CBCA) allows virtual and hybrid meetings as long as they are not prohibited by the articles of the corporation and the company provides “reasonable communication means.”

Other jurisdictions

In the United Arab Emirates, virtual meetings were initially permitted as an emergency measure during the pandemic. Since 2021, they have been permanently allowed in free zone companies, provided such a format is authorized in the articles of association.

In Singapore, the Companies Act permits virtual meetings provided that all core elements (participation, voting, and minute-keeping) are ensured. Additional guidance is issued by the Accounting and Corporate Regulatory Authority (ACRA).

How to provide for online meetings in the articles of association: key provisions

To ensure the legal validity of virtual shareholder meetings, they must be explicitly permitted in corporate documents, primarily in the articles of association. This is especially important for companies registered in jurisdictions that take a formalistic or rules-based approach to corporate governance procedures.

Mandatory provisions

In most countries where virtual meetings are permitted, companies are required to include clear language in their articles affirming the right to hold meetings fully or partially online. The following key elements are typically recommended:

1. An explicit authorization to hold general meetings (AGM/EGM) in an online format;
2. Specification of acceptable formats: videoconference, specialized virtual platforms, hybrid models;
3. Provisions ensuring shareholder identification and quorum integrity;
4. Voting procedures: electronic voting, pre-voting options, and technical rules of procedure;
5. Rules for validating resolutions and recording minutes in digital format;
6. The board of directors’ discretion to determine the meeting format.

A sample clause may read: «General meetings may be held in whole or in part by electronic means, provided that all participants can hear and speak to each other and that the identity of shareholders can be reasonably verified».

Jurisdictional specifics

In certain countries, such as Germany, Austria, and Switzerland, virtual meetings without express authorization in the articles may be declared invalid, particularly when resolutions affect shareholder rights.

Avoid overly rigid or tech-specific language that could require amendment if the platform or delivery method changes. It's advisable to allow for hybrid formats, which will remain popular even after the pandemic. Clarify how meeting materials will be accessed—via links, passwords, or with technical assistance if necessary.

Risks and legal consequences of violating the procedure

Despite the growing popularity of virtual meetings, many companies face legal and technical challenges. Failing to address these risks can result in shareholder disputes or the invalidation of resolutions.

Participant identification issues

The primary legal challenge is verifying the identity of shareholders and ensuring their right to participate and vote. Without a reliable identification mechanism, a company may face allegations of violating shareholder ownership rights. It is critically important to ensure:

• Two-factor authentication before joining the meeting;
• Linking votes to the official shareholder register;
• Verification of authority in cases of proxy representation.

Quorum validation and attendance tracking

Some jurisdictions require an exact count of attendees to establish a quorum. In virtual formats, it is essential to record shareholder connections and their duration of participation. Solutions include:

• Platforms with automatic login/logout registration;
• Video recordings of the meeting;
• Electronic attendance logs.

Technical failures and consequences

Case law in several countries shows that connection disruptions or platform unavailability can be grounds for challenging resolutions, especially if equal participation was not ensured. It is recommended to:

• Appoint a backup platform in advance;
• Include fallback procedures in the articles of association;
• Assign a technical support officer responsible from the invitation phase until the meeting ends.

Legitimacy of electronic voting

Online voting must comply with procedures set out in the articles of association and applicable national laws. Data protection gaps, vote duplication, or lack of confirmation may undermine the validity of decisions. Risk mitigation measures include:

• Certified electronic voting platforms with anti-fraud mechanisms;
• Confirmation of each vote via SMS or email code;
• Digitally signed minutes certifying the results.

How can Key2Law help adapt charters to digital corporate practice?

Key2Law team provides full regulatory support for adapting articles of association to the requirements of the digital era.

Here’s what we offer:

1. Review of current articles of association. We analyze the company's existing constitutional documents to identify provisions that may hinder remote governance or require updates due to recent legislative changes.
2. Drafting and implementing digital governance clauses. We incorporate worded provisions into the articles, addressing virtual meetings, permitted platforms, participant verification procedures, notice periods, and rules for electronic voting.
3. Compliance with regulatory frameworks. We ensure alignment with jurisdiction-specific legislation, including quorum requirements, shareholder identification, and data protection standards. We work with legal systems in the EU, the UK, the UAE, Singapore, Canada, and other key jurisdictions.
4. Integration with internal corporate policies. We tailor the updated articles to fit the company’s internal governance rules, including provisions on director liability, confidentiality, and corporate ethics.
5. Comprehensive support for shareholder approval. We assist in organizing shareholder votes to approve the revised articles, preparing agendas, notifications, and draft documentation. We also support registration of changes with corporate registries.
6. Comprehensive support. Beyond the articles, we can prepare supporting materials such as meeting regulations, notice templates, electronic verification procedures, and internal instructions for the CEO and board of directors.

Key2Law helps businesses confidently transition to digital corporate governance, reducing  risks and enhancing operational flexibility.