COVID-19 and company announcements

COVID-19, or coronavirus, is very much the centre of attention and is being closely monitored by authorities, businesses and private persons. This news article examines what deliberations the current situation calls for in relation to listed companies.

Can COVID-19 be considered inside information?

A listed company must as soon as possible disclose to the public any inside information which directly concerns the company. This follows from Article 17(1) of the Market Abuse Regulation. 

Information about market conditions, macroeconomic and social circumstances, etc., available to anyone cannot qualify as inside information about a particular company. Therefore, neither the COVID-19 outbreak in itself nor its potential effect on stock markets generally will be considered inside information which a company is obliged to publish. 

If, however, COVID-19 and its consequences have a particular effect on the company, that may qualify as inside information. This will be the case if the information meets the inside information criteria, meaning that the information must (a) be sufficiently precise; (b) affect the share price; and (c) not have been made public, see Article 7 of the Market Abuse Regulation. For example, a company may have been forced to shut down production, leaving it unable to meet its supply obligations, or a company may find itself at risk that a sub-supplier cannot perform material agreements.  A company may postpone publication of inside inside information if the criteria for doing so are met. 

Change of announced expectations 

Section 99(1) of the Danish Financial Statements Act requires all listed companies to publicly announce their expectations. The companies must also state the particular presumptions and factors on which their expectations are based, e.g. a presumption of a particular development in currency exchange rates or growth on important markets. 

COVID-19 and its development in the days and weeks to come may therefore well become a relevant factor in relation to announced expectations, and for many companies it will be relevant to consider changing announced expectations. E.g. if the company’s revenue has declined considerably or is expected to decline considerably. 

Holding of general meetings

For companies whose financial year follows the calendar year, the annual general meeting will be scheduled for just about this time of year. From a practical perspective, this means a gathering of potentially many people in one place and thus an increased risk of infection with COVID-19. 

Shareholders with valid admission cards are entitled to attend general meetings in person (unless the articles of association allow for the holding of general meetings solely by electronic means) and no further conditions may be placed on their participation in the meeting. As yet, the Danish Health Authority has not banned physical general meetings, and general meetings must therefore be held as per the usual procedure. 

Update 4 May 2020: Since the publication of this news article there have been changes to the ban on gatherings (which is adjusted on an ongoing basis), the possibility of having an entirely electronic general meeting has been introduced (even if not provided for in the articles of association), and new temporarily rules regarding the extension of filing deadlines for annual reports have been implemented - please see our news article of 16 April 2020.

You might want to consider reducing or even cancelling any planned serving of food or refreshments to reduce the risk of infection. You might also want to follow the example set by a number of companies and extend the time allowed for voting by post and urge shareholders who are not feeling well to vote by post rather than attend in person. 

What should you do?

Our recommendation is that companies continuously monitor the development to see if as a consequence of COVID-19 anything needs to be publicly announced, including any changes to presumptions and factors underlying announced expectations. 

Also, we recommend keeping a watchful eye, right up until the holding of the annual general meeting, on the guidelines of the Danish Health Authority, to see if any special precautions are needed or required in relation to the meeting.