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Corporate

Coronavirus and the annual general meeting

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Legal news
calendar 13 March 2020
globus Denmark

Denmark has been seriously affected by coronavirus, and the government has just called on private companies to send employees home as far as possible. In addition, a bill has just been passed amending the Danish Epidemic Act which allows for the banning of larger assemblies. This causes several problems for Danish businesses, hereunder the annual general meeting where the annual report must be approved. Read here to see what the company's options are.

Ban of large events

The government has just passed a bill amending the Epidemic Act, which allows the Minister of Health and the Aged to ban the holding of large assemblies, events, etc. Initially, the limit is expected to be set at 100 people, in line with the government's latest recommendation, but the law gives the minister the right to continuously adjust the number. The law comes into force at the time it is published, but the ban is expected to take effect from Monday, March 16 2020.

Obligation to hold an annual general meeting and to file the annual report

According to the Danish Companies Act the annual meeting must be held in such good time that the company’s annual report can be approved and filed before the reporting deadline. The deadline is stipulated in the Danish Financial Statements Act and is for most companies 5 months from the end of the financial year. For listed companies, the deadline is 4 months from the end of the financial year.

For most companies in Denmark the financial year is the same as the calendar year. Therefore, the reporting deadline for most companies is 31 May 2020 and for listed companies with the calendar year as financial year 30 April 2020.

Neither the Companies Act nor the Financial Statements Act provides for the postponement of the deadline for holding the general meeting or for reporting the annual report. However, the recently adopted amendment to the Epidemic Act allows the Minister of Health and the Aged to dispense from the deadline for submitting the annual report if the timely submission is impossible or it is disproportionately hard for the company to report the annual report within the deadline due to, among other things, the ban of large events. How this dispensation will work in practice is unknown.

Cancellation of the general meeting

The first question is whether a general meeting should be cancelled. This depends on the number of participants, i.e. the number of shareholders and members of the management and other participants, and the risk for infection.

It is the responsibility of the central governing body of the company to assess whether a general meeting should be canceled. If the number of participants exceeds the expected number of 100 people, the management is obliged to cancel the general meeting. The cancellation can take place right up to the start of the general meeting. The management may also, even if less than 100 people attend, be required to cancel the general meeting, for example if the holding will cause a real danger to the participants or most participants will not be able to participate.

Cancellation can take place right up to the start of the general meeting, but it is a good idea already to decide on the issue, and at the same time consider whether the general meeting can be held otherwise, so that a cancellation is not necessary.

Electronic or partial electronic general meeting

Companies can only hold a fully electronic general meeting if this possibility is expressly stated in the company's articles of association. If it does, information on this should be included in the convention of the general meeting. If the articles of association do not contain such a provision, the company's management cannot decide that the upcoming general meeting should be held completely electronic.

On the other hand, it is possible to hold a partial electronic general meeting so that the company's participants can attend and vote electronically or attend physically. However, this requires that the convention of the general meeting gives the participants information on how to register for the electronic participation and how the electronic general meeting will be conducted, including how votes are cast.

However, attention must be paid here to the deadline for convening a general meeting, which follows from the company's articles of association or the Companies Act.

This is relevant if the general meetings has already been convened. If the deadline for a timely convention has not yet expired, the company's management can supplement or change the already issued convention with the required information. On the other hand, if the deadline for convening has already expired, it will probably not be possible to hold the general meeting completely electronically, even if this is possible according to the articles of association, but it will probably be possible to offer both electronic and physical participation and encourage the participants to use the electronic options.

Is there an obligation to attend the general meeting and is it possible to prevent shareholders or management members from attending?

No shareholder is required to attend the general meeting, but if you choose not to attend, you will of course lose your voting rights and influence on this general meeting, unless you participate by valid proxy. On the other hand, the company representatives who must present the management report and present the annual report are obliged to attend the general meeting.

Companies cannot cut off capital owners and management members from attending the annual general meeting. However, it is probably possible to specifically cut off a participant who has obvious symptoms of infection, is in home quarantine or has been in a high risk area within the last 14 days. In that case, it is recommended to allow the participant to vote electronically or by proxy.

Practical measures to hold the general meeting with minimum health risk

The possibility to hold the general meeting completely electronically should be explored. If this is not a possibility because the company’s articles of association do not contain this option, the possibility of a partial electronic general meeting should be examined.

In addition, the company may invite the capital owners to meet by proxy or postal vote. The company has the opportunity to extend the deadline for casting postal votes and proxy right up to the day of the general meeting, even if there is a different deadline set out in the convening of the general meeting.

It may also be a good idea to set up a webcast so that the capital owners can follow the general meeting without physically being present.

Finally, the general meeting should be conducted as time-efficiently as possible, and management members and capital owners who attend physically should keep physical distance to each other.

In addition, for companies that only have a smaller number of capital owners, it may be possible to hold the general meeting in derogation of deadline and form requirements, if all the capital owners agree to this. Thus, if all capital owners agree, the general meeting can be held as a so-called desk general meeting without any physical or electronic voting. However, listed companies cannot avail themselves of this opportunity.

IUNO’s opinion

At IUNO, we believe that the coronavirus outbreak must be taken seriously, and it is very important to follow the public orders. At the same time business should continue as normally as possible. We are always ready to help your company get the best deal during this difficult time, and we can help you hold the annual general meeting and approve the annual report in the safest way to reduce health risks.

Ban of large events

The government has just passed a bill amending the Epidemic Act, which allows the Minister of Health and the Aged to ban the holding of large assemblies, events, etc. Initially, the limit is expected to be set at 100 people, in line with the government's latest recommendation, but the law gives the minister the right to continuously adjust the number. The law comes into force at the time it is published, but the ban is expected to take effect from Monday, March 16 2020.

Obligation to hold an annual general meeting and to file the annual report

According to the Danish Companies Act the annual meeting must be held in such good time that the company’s annual report can be approved and filed before the reporting deadline. The deadline is stipulated in the Danish Financial Statements Act and is for most companies 5 months from the end of the financial year. For listed companies, the deadline is 4 months from the end of the financial year.

For most companies in Denmark the financial year is the same as the calendar year. Therefore, the reporting deadline for most companies is 31 May 2020 and for listed companies with the calendar year as financial year 30 April 2020.

Neither the Companies Act nor the Financial Statements Act provides for the postponement of the deadline for holding the general meeting or for reporting the annual report. However, the recently adopted amendment to the Epidemic Act allows the Minister of Health and the Aged to dispense from the deadline for submitting the annual report if the timely submission is impossible or it is disproportionately hard for the company to report the annual report within the deadline due to, among other things, the ban of large events. How this dispensation will work in practice is unknown.

Cancellation of the general meeting

The first question is whether a general meeting should be cancelled. This depends on the number of participants, i.e. the number of shareholders and members of the management and other participants, and the risk for infection.

It is the responsibility of the central governing body of the company to assess whether a general meeting should be canceled. If the number of participants exceeds the expected number of 100 people, the management is obliged to cancel the general meeting. The cancellation can take place right up to the start of the general meeting. The management may also, even if less than 100 people attend, be required to cancel the general meeting, for example if the holding will cause a real danger to the participants or most participants will not be able to participate.

Cancellation can take place right up to the start of the general meeting, but it is a good idea already to decide on the issue, and at the same time consider whether the general meeting can be held otherwise, so that a cancellation is not necessary.

Electronic or partial electronic general meeting

Companies can only hold a fully electronic general meeting if this possibility is expressly stated in the company's articles of association. If it does, information on this should be included in the convention of the general meeting. If the articles of association do not contain such a provision, the company's management cannot decide that the upcoming general meeting should be held completely electronic.

On the other hand, it is possible to hold a partial electronic general meeting so that the company's participants can attend and vote electronically or attend physically. However, this requires that the convention of the general meeting gives the participants information on how to register for the electronic participation and how the electronic general meeting will be conducted, including how votes are cast.

However, attention must be paid here to the deadline for convening a general meeting, which follows from the company's articles of association or the Companies Act.

This is relevant if the general meetings has already been convened. If the deadline for a timely convention has not yet expired, the company's management can supplement or change the already issued convention with the required information. On the other hand, if the deadline for convening has already expired, it will probably not be possible to hold the general meeting completely electronically, even if this is possible according to the articles of association, but it will probably be possible to offer both electronic and physical participation and encourage the participants to use the electronic options.

Is there an obligation to attend the general meeting and is it possible to prevent shareholders or management members from attending?

No shareholder is required to attend the general meeting, but if you choose not to attend, you will of course lose your voting rights and influence on this general meeting, unless you participate by valid proxy. On the other hand, the company representatives who must present the management report and present the annual report are obliged to attend the general meeting.

Companies cannot cut off capital owners and management members from attending the annual general meeting. However, it is probably possible to specifically cut off a participant who has obvious symptoms of infection, is in home quarantine or has been in a high risk area within the last 14 days. In that case, it is recommended to allow the participant to vote electronically or by proxy.

Practical measures to hold the general meeting with minimum health risk

The possibility to hold the general meeting completely electronically should be explored. If this is not a possibility because the company’s articles of association do not contain this option, the possibility of a partial electronic general meeting should be examined.

In addition, the company may invite the capital owners to meet by proxy or postal vote. The company has the opportunity to extend the deadline for casting postal votes and proxy right up to the day of the general meeting, even if there is a different deadline set out in the convening of the general meeting.

It may also be a good idea to set up a webcast so that the capital owners can follow the general meeting without physically being present.

Finally, the general meeting should be conducted as time-efficiently as possible, and management members and capital owners who attend physically should keep physical distance to each other.

In addition, for companies that only have a smaller number of capital owners, it may be possible to hold the general meeting in derogation of deadline and form requirements, if all the capital owners agree to this. Thus, if all capital owners agree, the general meeting can be held as a so-called desk general meeting without any physical or electronic voting. However, listed companies cannot avail themselves of this opportunity.

IUNO’s opinion

At IUNO, we believe that the coronavirus outbreak must be taken seriously, and it is very important to follow the public orders. At the same time business should continue as normally as possible. We are always ready to help your company get the best deal during this difficult time, and we can help you hold the annual general meeting and approve the annual report in the safest way to reduce health risks.

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Aage

Krogh

Partner

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Lucca

Powers Bates

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Grønlund Jakobsen

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Skall Søby Nielsen

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Kræmer Pedersen

Senior legal assistant

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Valentin Olsen

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