Requirements for the invitation to the general meeting

An invitation to a general meeting is a legal act of a joint-stock company, which is carried out on its behalf by the convener of the general meeting.[1] A general meeting of a joint-stock company is convened in particular by publishing the invitation on the company's website at least 30 days before the general meeting. The company is also obliged to send an invitation to the general meeting to shareholders owning registered shares at the address stated in the list of shareholders and to shareholders owning bearer shares at the address stated in the register of book-entry securities.[2]

For shareholders, the invitation to the general meeting has a primarily informative function and is also important from the point of view of protecting shareholders' rights. The invitation to the general meeting should provide shareholders with information not only about the place and time of the general meeting, but also about what will be discussed and decided at the general meeting, so that shareholders can decide whether to attend the general meeting, have time to prepare for the general meeting and consider how to exercise their voting rights.[3]

However, the importance of the invitation to the general meeting does not lie solely in its stated information function. Its importance, the importance of the correctness of the information in the invitation, is also given by the fact that any defect in the invitation may constitute a reason for declaring the resolution of the general meeting invalid.[4]

The content requirements of an invitation to a general meeting of a joint-stock company are regulated in Section 407 of the Business Corporations Act. Section 407(1) of the Business Corporations Act regulates the minimum list of requirements that must be included in each invitation to a general meeting. These requirements include:

a) company name and registered office,

b) the place, date and time of the general meeting, which should be determined in such a way as not to unduly restrict the shareholder's right to participate,

c) indication of whether an ordinary or extraordinary general meeting is being convened;

d) the agenda of the general meeting, including the name of the person proposed as a member of the company's elected body. The agenda or program of the general meeting is one of the most important elements of the invitation, as it determines the subject of the general meeting, and therefore what will be decided at the general meeting,[5]

e) the decisive day for participation in the general meeting, if determined, and an explanation of its significance for voting at the general meeting,

f) draft resolution of the general meeting and its justification,

g) the deadline for delivery of the shareholder's statement on the agenda of the general meeting, if correspondence voting is allowed; this deadline may not be shorter than 15 days; the delivery of the invitation to the shareholder is decisive for the beginning of its running, unless the articles of association provide otherwise.

Draft resolution of the general meeting and its justification

Due to the scope of the article, it is not possible to address in detail all the individual requirements of an invitation to a general meeting, therefore the article will further focus on the requirement set out in Section 407(1)(f) of the Business Corporations Act" draft resolution of the general meeting and its justification ", as it is this requirement of an invitation that is interpreted in recent case law of the Supreme Court.

If the general meeting of a joint-stock company is to adopt resolutions according to the agenda of the general meeting, the invitation to the general meeting must, pursuant to Section 407(1)(f) of the Business Corporations Act, contain a draft of this resolution and a justification for why such a resolution should be adopted. This mandatory requirement of the invitation thus reflects the information function of the invitation to the general meeting, i.e. the fact that the invitation to the general meeting should provide shareholders with sufficient information about what will be discussed at the general meeting so that shareholders can prepare for the general meeting and consider how they will exercise their voting rights.[6]

However, the law does not stipulate what requirements a draft resolution of the general meeting and its justification should contain. Therefore, these requirements must be inferred in doctrine and case law, and it is precisely the requirements of a draft resolution of the general meeting and, in particular, its justification that are addressed in recent case law of the Supreme Court.

The Supreme Court dealt with the details of the draft resolution of the general meeting and its justification in its resolution of 27 March 2019, file no. 27 Cdo 3885/2017, published under number 9/2020 Coll. of Decisions (hereinafter also referred to as R 9/2020). This resolution of the Supreme Court concerned in particular the issues of assessing the validity of the resolution of the general meeting on the distribution of profit.

Regarding the requirements of an invitation to a general meeting of a joint-stock company, in particular the draft resolution of the general meeting and its justification, the Supreme Court stated in its decision R 9/2020 that the invitation to a general meeting must provide shareholders with sufficient information not only about the place and time of the general meeting, but also about what matters will be discussed at the general meeting, so that shareholders can adequately prepare for the general meeting and consider with knowledge of the matter how they will exercise their voting rights. Therefore, it is required that the invitation to a general meeting also contain a draft resolution of the general meeting and its justification. The draft resolution must be presented in such a form that it can be voted on without further ado. The justification must provide shareholders with at least the basic information necessary to assess the reasons for which the adoption of the resolution is proposed.

The reasons for which a resolution is proposed should be stated clearly, briefly and concisely. The reasons should make it clear to shareholders, without undue effort or time, why the board of directors, or other person convening the general meeting, is proposing that the general meeting decide on the matter and why it should do so in the manner proposed.

Proper justification is not, for example, a mere statement that the decision on a given matter falls within the competence of the general meeting, nor a blanket reference to documents of a general nature from which shareholders cannot obtain the necessary information without making disproportionate efforts.

However, the invitation to the general meeting may be quite extensive depending on the specific circumstances. In such cases, the reasons for which a particular resolution is proposed may be stated only briefly in the text of the invitation and further elaborated in a separate annex, which will, however, be part of the invitation and to which reference will be made in the text of the invitation, in the section on justification of the proposed resolution.[7]

The Supreme Court followed up on these conclusions stated in the important decision of the Supreme Court R 9/2020 and elaborated on these conclusions in its current decision of 28. 1. 2025 file . zn. 27 Cdo 173/2024, in which the Supreme Court stated that the conclusions regarding the requirements of a general meeting resolution and its justification stated in decision R 9/2020 cannot be interpreted as meaning that the justification of the draft general meeting resolution, stated in the invitation to the general meeting, must contain all the information that shareholders wish to know. The invitation to the general meeting should not replace the discussion of matters at the general meeting. The invitation to the general meeting therefore does not have to contain all the information about the proposed resolutions, which shareholders should only learn about at the general meeting, and therefore should not in fact replace the discussion of matters at the general meeting. It is sufficient if the justification for the proposed resolution contains only the basic information for which the adoption of the resolution is proposed. More detailed information should then be provided to shareholders only at the general meeting, where shareholders can exercise their right to an explanation pursuant to the provisions of Section 357 of the Business Corporations Act.

Conclusion

The invitation to the general meeting is an important legal act of a joint-stock company, which provides shareholders with information, among other things, about what matters will be discussed at the general meeting, thanks to which shareholders can prepare for the general meeting well in advance and consider how they will exercise their voting rights. The invitation to the general meeting and compliance with its requirements is also important because a defect in the invitation to the general meeting may be a reason for declaring the resolution of the general meeting invalid. The requirements of the invitation to the general meeting are set out in the provisions of Section 407 of the Business Corporations Act. In particular, the interpretation of the requirements set out in the provisions of Section 407, paragraph 1, letter a f) Business Corporations Act, i.e. the " draft resolution of the general meeting and its justification ", is addressed by the recent case law of the Supreme Court, namely in the important decision R 9/2020, according to this decision, the justification for the proposal to adopt a certain decision should be fundamentally brief, clear and concise, and it should be clear to the shareholders why it is proposed that the general meeting decide on the given matter, and why it should happen in the proposed manner. In its current decision of 28. 1. 2025, file no. 27 Cdo 173/2024, the Supreme Court emphasized that the invitation to the general meeting should not replace the discussion of matters at the general meeting.

[1] ŠTENGLOVÁ, I. 3.3 Invitation to the general meeting. In: ŠTENGLOVÁ, I., et al. Joint-stock companies. Prague: CH Beck, 2023, p. 489.

[2] POKORNÁ, J., et al. Commercial Companies and Cooperatives, 2nd edition. Prague: CH Beck, 2022, p. 370.

[3] FILIP, V., LASÁK, J. § 407 [Content requirements of the invitation]. In: LASÁK, J., et al. Business Corporations Act: Commentary. Wolters Kluwer, 2021.

[4] FILIP, V., LASÁK, J. § 407 [Content requirements of the invitation]. In: LASÁK, J., et al. The Business Corporations Act: Commentary. Wolters Kluwer, 2021.

[5] ŠUK, P. § 407 [Contents of the invitation]. In: ŠTENGLOVÁ, I., et al. Act on Business Corporations. 3rd edition. Prague: CH Beck, 2020, p. 818.

[6] POKORNÁ, J., et al. Commercial Companies and Cooperatives, 2nd edition. Prague: CH Beck, 2022, pp. 370-371.

[7] The conclusions stated in the Supreme Court's decision R 9/2020 are also agreed with by the doctrine. Compare, for example, ŠTENGLOVÁ, I. 3.3 Invitation to the general meeting. In: ŠTENGLOVÁ, I., et al. Joint-stock companies. 1st edition. Prague: CH Beck, 2023, pp. 493-494.; ŠUK, P. § 407 [Contents of the invitation]. In: ŠTENGLOVÁ, I., et al. Act on Business Corporations. 3rd edition. Prague: CH Beck, 2020, p. 819.

Source: epravo.cz