Enhancing virtual governance: comparative lessons from COVID-19 company laws

Abstract

This article documents elements of COVID-19-inspired company legislation on digital participation of shareholders in general meetings in 22 countries and analyses to what extent such legislation can function as a blueprint for law reform. Lawmakers need to strike a balance between ensuring a smooth general meeting (from management's perspective) and protecting shareholders' rights. COVID-19 legislation with regard to shareholder interventions has lacked this balance. Further, crisis legislation, adopted in haste as it was, could not reflect the fundamental shift towards institutionalized shareholdings. Once adopted, there is a risk that the hasty choices made during COVID times will stick, resulting in suboptimal regulation of shareholder meetings. The crisis legislation on meetings should thus be revisited, reflecting three paradigm shifts in corporate governance, namely the form of the meeting (virtual instead of in-person), its temporal dimension (multi-day process instead of a specific meeting day), and the institutionalisation of ownership, which allows investors to deploy resources and technology unavailable to most individuals.