COVID-19 – Impacts on general meetings and commercial leases

COVID-19 – Impacts on General Meetings and Commercial Leases

For several weeks, the country’s economic life has been deeply affected by the COVID-19 pandemic, which continues to spread worldwide.

A large number of businesses have seen their activities suspended or severely slowed down due to the public health measures implemented to reduce the spread of the virus.

Following the state of public health emergency declared by the law of March 23, 2020, the Government adopted a series of measures to adapt corporate life and the continuation of contractual obligations in this difficult health and economic context.

Indeed, the lockdown measures introduced on March 18 raised the necessary question of adjusting the rules governing companies’ general meetings and their decision-making processes.

The impossibility of convening general meetings at a time traditionally dedicated to approving annual financial statements required greater flexibility in the rules relating to meetings and deliberations. The ordinances of March 25, 2020, therefore, authorized the holding of general meetings via videoconference or telecommunication.

Similarly, the ordinance provides for the extension of deadlines for approving annual accounts, meaning that the time limits are not suspended but extended by an additional two to three months, depending on the specific circumstances detailed in the ordinance. These provisions apply to annual accounts closed between March 31, 2019, and June 24, 2020.

Beyond the rules governing the operation of companies, additional measures have been adopted regarding the effects of contractual obligations — specifically, the sanctions applicable to contractual non-performance occurring between March 12, 2020, and the end of the state of emergency, and in some cases, for several months thereafter.

In particular, sanctions for non-performance — such as penalty clauses or termination clauses — are suspended. These clauses will only take effect if the debtor fails to perform within one month following the end of the state of emergency, currently set for May 24, 2020.

These measures apply particularly to commercial leases for tenants eligible for the solidarity fund established by Ordinance No. 2020-317, aimed at supporting businesses significantly affected by the economic consequences of the pandemic. Such tenants benefit from a suspension of rent payments on their commercial leases without facing penalties or sanctions from their landlords for non-payment.

In light of these exceptional measures, Cabinet Subirats Avocat is here to support and assist you in your procedures and help you anticipate the potential difficulties arising from this unprecedented crisis.