On 6 March 2020, the Government recommended that events with more than 1,000 participants should be cancelled or postponed due to the risk of the spreading of COVID-19, and that event organizers must assist in reducing the risk of infection. The recommendation from the Government currently applies for the month of March. This affects a large number of upcoming general meetings in listed companies. In this newsletter, you will find a practical guide to handling COVID-19 in connection with conducting the upcoming general meetings, including how companies and participants should behave.
The annual general meeting must be held at such date that allows ample time for the annual report to be submitted to the Danish Business Authority within four months of the end of the financial year; i.e. by Thursday, 30 April 2020 at the latest for companies using the calendar year as the financial year.
If the time limit is exceeded, the Danish Business Authority may impose daily or weekly fines on the members of the board of directors and may lastly compulsorily dissolve the company.
Neither the Danish Companies Act nor the Danish Financial Statements Act contain authority for the Danish Business Authority to postpone the time limit for holding general meetings or the companies’ adoption and submission of the annual reports. Currently, we are not aware of any new legislation, which would provide the possibility of postponing the time limit.
Companies may cancel the general meeting entirely until the day of the scheduled general meeting.
Any cancellation must be notified in the same manner as the notice of the general meeting, i.e. as a company announcement, on the website and by email/letter to the shareholders, who have requested this. In addition, if the company has an ADR programme, this must be coordinated with VP Securities/Computershare and the depositary, if any.
If the general meeting is cancelled, a new general meeting must be convened to be held before the end of April in order to ensure the timely submission of the annual report, i.e. by 30 April 2020 at the latest. Please note, that the articles of association may prescribe a different time limit.
The notice of the general meeting must in accordance with the rules of the Danish Companies Act be sent out by 8 April 2020 at the latest (three weeks prior to the meeting) and by 25 March 2020 at the earliest (five weeks prior to the meeting). If the company has an ADR programme, any time limits under the depositary agreement must also be observed.
Thus, the options of postponing the annual general meeting to a later time are limited.
The authorities in certain countries have imposed restrictions on assemblies, which may affect large general meetings. In Denmark, no restrictions have yet been imposed on large assemblies, but the Government recommends that events with more than 1,000 participants be cancelled or postponed due to the risk of the spreading of COVID-19.
If restrictions on assemblies are imposed in Denmark, the general meeting may still be held – e.g. by using separate rooms with video link. In this respect, it might be worth considering alternative options for holding the general meeting as reviewed below.
In addition, it must be assumed that the board of directors will be obliged to cancel the general meeting, if it is obvious that the general meeting may constitute a risk for the participants due to COVID-19. It is therefore recommended that the companies keep themselves updated on the development of COVID-19 on the Danish Health Authority’s website.
Due to the risk of the spreading of COVID-19, it is recommended that as few people as possible be assembled in one place. However, it is still important to ensure that as large a number of shareholders as possible are represented or participate. The companies should therefore consider taking a number of measures in connection with holding the general meeting this year.
The individual companies should consider issuing an announcement to the company’s shareholders (either all of them or solely the ones registered to attend), e.g. by announcement on the website and/or announcement from VP Securities/Computershare encouraging shareholders to:
At the actual general meeting, the company may also put up posters providing advice on hygiene and put out hand sanitizers in order to prevent infection, ensure that the participants are spread out, e.g. by placing participants on every other seat in the hall/halls and put up TV screens in hallways etc., allowing participants that attend to follow the general meeting without sitting down in the hall with the other participants.
The company representatives, who must present the board of directors’ report and present the annual report must be present at the general meeting. This will typically be the company’s chairman of the board of directors or the deputy chairman and the CEO.
It is not a requirement that the company’s other management members attend the general meeting, but it is considered good corporate governance that all members of the management attend, unless the persons in question within the past two weeks have visited high-risk areas for local spreading of COVID-19 or have been in close contact with other persons, who have either visited such areas or are being monitored for infection with COVID-19.
Is it possible to prevent people from attending the general meeting?
The companies cannot prevent shareholders from attending general meetings – or from bringing advisors – unless a participant shows obvious signs of being infected. However, companies may encourage participants not to bring advisers.
In addition, companies may urge people to follow the Danish Health Authority’s recommendations and omit participating if they (i) show signs of infection, (ii) within the past two weeks have visited high-risk areas for local spreading of COVID-19 or (iii) within the past two weeks have been in close contact with other people, who have either visited such areas or are being monitored for infection. In addition to issuing an announcement, cf. above, companies may put up posters in this respect at the entrance of the general meeting.
The company may as an alternative to the physical general meeting hold a wholly virtual general meeting (i.e. without any physical attendance), if the company’s articles of association contain provisions in this respect. If the articles of association do not contain such provisions, the company cannot decide to hold a wholly virtual annual general meeting in 2020.
Partially virtual general meetings, where the participants may choose to attend virtually or physically, may be decided by the board of directors and does not require a separate provision to this effect in the articles of association.
This presupposes that the notice of the general meeting states how the participants can register for the virtual meeting and the procedure for virtual participation.
If the notice of the general meeting has already been sent out and the notice does not contain the option of a partially virtual general meeting, it will (i) until the latest date and time for convening the general meeting, or (ii) by cancelling the general meeting and re-convening a new general meeting, be possible to forward a new notice of general meeting, which includes notice of the partially virtual general meeting.
If the time limit for convening the general meeting has expired, and the notice does not contain information on a partially virtual general meeting, the chair of the meeting will have to decide whether the company can carry through a partially virtual general meeting. However, this presupposes that the general meeting can be held safely and that none of the participants are prevented from participating in the general meeting.
It is important, that companies coordinate the use of virtual participation with the chair of the meeting, VP Securities/Computershare and the streaming provider in ample time prior to the general meeting, since partially/wholly virtual general meeting involve a large technical setup and it must be ensured that the general meeting is conducted in a safe and responsible manner. A partially virtual general meeting presupposes that the participants have the possibility of following the general meeting, have the possibility to vote and to take the floor through electronic media.