COVID-19: General meetings and the ban on gatherings
Gatherings (expected to be) attended by more than 100 persons are not allowed. What do you need to consider?
On 11 March 2020, the Danish Government launched a number of new and strict initiatives to combat the COVID-19 virus. One of those initiatives is the ban on gatherings of a certain size. This will have an impact on many of the companies that are about to arrange general meetings in the near future. We will below give you a short and practical overview of how you can arrange such upcoming general meetings and what you should be particularly attentive to.
Ban on gatherings
Yesterday, 12 March 2020, the Danish Parliament adopted a Bill amending the Danish Epidemics Act and allowing the Danish Minister of Health to prohibit the holding of and participation in large gatherings, events, etc. ("Ban on Gatherings"). The limit is expected to be 100 persons, but that number may be adjusted continually. The amendments to the Act will enter into force when advertised in the Danish Law Gazette, but a Ban on Gatherings is expected to enter into force as of Monday, 16 March 2020.
Timing of annual general meeting, and deadline for submission of annual report
The general rule is that the annual general meeting must be held in time for the adopted annual report to reach the Danish Business Authority before expiry of the deadline provided by the Danish Financial Statements Act. For compa-nies having the calendar year as their financial year, the deadline will be either 30 April (listed companies) or 31 May (unlisted companies), so their annual general meetings must be held before expiry of those deadlines if their annual reports are to be submitted in time.
However, the aforesaid Bill allows the Minister of Health to grant an exemption from the deadline for the submission of the annual report if it proves impossible or involves a disproportionate effort to observe that deadline due to, for instance, the Ban on Gatherings. It is still unknown how such exemption will work in practice.
Practical considerations and recommendations for the holding of general meetings
Any company holding a planned annual general meeting in the near future should to the widest extent possible try to organise it in an appropriate matter with the least possible number of participants, including by ensuring that the shareholders are given the best possible framework for voting at and watching the meeting without having to be present.
Below you will find a list of our recommendations for initiatives and considerations to be addressed in connection with the holding of general meetings in the near future:
- Companies with more than 100 registered participants to the annual general meeting should issue/publish on their websites a request encouraging the shareholders to refrain from attending the meeting physically but in-stead to use their proxy/postal votes and attend the meeting via webcast.
- If such request is issued, the deadline for returning the proxy/postal votes should be set at the latest possible time allowing the general meeting to be held in a proper manner. This should be coordinated with the keeper of the company's register of shareholders, who normally receives proxy/postal votes on behalf of the company.
- You may also consider the possibility of distributing the participants in more than one room at the same time. Persons sitting in another room than the chairman of the meeting and the management will only be able to follow the meeting on a screen. This will not reduce the number of participants in the general meeting, but it will reduce the risk of infection. You should ensure that it is possible to ask questions into a microphone con-nected to the room in which the chairman of the meeting and the management are located.
- The company may consider whether only a minimum number of management representatives, for example the chairman of the board of directors and the CEO or the CFO, and absolute necessary employees should participate.
- Note that all persons attending the event count towards the 100 persons, i.e. shareholders, management members, employees, auditor, chairman of the meeting, representatives from e.g. VP Securities or Com-putershare, persons responsible for scenography and AV solutions, and any other staff members employed at the meeting place.
- Consider whether to contact the meeting place to arrange that only a minimum number of staff members are present in the room.
- The participants must be counted as they appear. If the number of persons appearing to attend a general meeting exceeds 100, the rules in company law on the equal treatment and administrative rights of share-holders (for example the rights to ask questions and to vote), may very well require the chairman of the meet-ing to cancel the general meeting. However, it is our experience so far that the general meetings held during the past few days have only been attended by a small number of shareholders (even if more than 100 had signed up), so this will probably not be a problem.
- At the beginning of the general meeting it should be announced that in order to reduce the risk of infection, only a limited number of management members are present.
- Other management members may, in addition to watching the general meeting via webcast, be available to answer questions by telephone if, against expectations, the attending management members cannot answer the questions asked. The practical procedure could be that the relevant management member gives his/her answer to the chairman of the meeting or to the chairman of the board of directors, who then passes on the answer to the general meeting.
- According to the Danish Companies Act, the auditor must be present at the annual general meeting of a listed company.
- The participants must be seated on every second chair or with proper distance between each other.
- Consider whether to omit meals and refreshments completely.
- The guidelines of the Danish health authorities should of course be observed - no shaking of hands, etc.
Is it possible to hold an electronic general meeting instead of a physical?
An entirely electronic general meeting (i.e. without any possibility of physical presence) can only be held if provided for in the articles of association of the company. This would require, therefore, that it had been approved by a former general meeting.
A partly electronic general meeting (i.e. where physical attendance is supplemented by the possibility of attending, asking questions and voting at the meeting electronically) can be held if the board of directors decides so, but it is a condition that the notice summoning the general meeting contains information about the electronic systems to be used and the procedure for digitally attending the meeting. In principle, therefore, companies that have already sum-moned the general meeting will not have this option. However, if there is sufficient time to postpone the general meet-ing, they may consider doing so.
Considerations for listed companies and the COVID-19 Task Force
Listed companies also face various other questions arising from the COVID-19 situation - including whether the ef-fects of the virus outbreak may constitute inside information. You can read more about this in our previous newsletter and in the ESMA guidelines. In addition, Kromann Reumert has set up a COVID-19 Task Force consisting of a number of our experts within various legal practice areas. We will continuously provide information about the problems that you and your company may encounter in connection with the COVID-19 situation.
Read more about our COVID-19 Task Force.