Bill to extend filing deadline for annual reports
The COVID-19 situation has put many companies under pressure - also when it comes to holding of general meetings and filing of annual reports. Now, help is on the way; a Bill was introduced on 31 March and is expected to be passed this Thursday, 2 April.
Update 5 May 2020: Note that this news article has been updated. Please see our updated news article of 16 April 2020 regarding the final rules on granting exemption from the deadline for filing annual reports.
The Bill will (if passed) make it possible for the Minister of Industry, Business and Financial Affairs to
- grant exemptions from the deadline for filing annual reports;
- allow companies to depart from provisions in their articles of association stipulating when they must give notice of and/or hold their annual general meeting.
If the Bill is passed, the new rules will enter into force only when and if the Minister implements them by issuing an Executive Order. In that case, they may take effect from 1 March. However, an Executive Order to implement the new rules will be issued only if, due to the COVID-19 situation, it is deemed impossible or excessively difficult, directly or indirectly, for many companies to meet the prescribed deadlines.
Extended scope of previous exemption
It is already possible to apply for an exemption under the Danish Epidemics Act. Consequently, if the special COVID-19 measures that have been taken, including the ban on gatherings of more than 10 persons, make it impossible or excessively difficult for a company to file its annual report with the Business Authority and/or the Financial Supervisory Authority on time, then the filing deadline may be extended to up to 8 weeks after lifting of the ban on gatherings. The exemption is limited to companies with more than 10 owners.
However, this exemption from the filing deadline is not available if it is impossible or excessively difficult for the company to meet the deadline for reasons other than the COVID-19 measures taken under the Epidemics Act. Obviously, the COVID-19 situation also has far-reaching consequences for those companies that are not directly affected by the COVID-19 measures taken under the Epidemics Act (ban on gatherings etc.). The Danish government states in the Bill that all companies should concentrate on survival rather than compliance with the deadline for filing of the annual report.
Now, it is therefore proposed to implement a general extension of the deadline for filing of the annual report with the Business Authority and/or the Financial Supervisory Authority. The Bill also allows companies to set aside obligations stipulated in their articles of association (or any similar document).
According to the Bill, it is expected that:
- the deadline for filing of the annual report will be extended by 3 months;
- rules will be introduced to extend the deadline for filing of half-year and interim reports;
- the management will be authorised to depart from provisions in the articles of association stating when the company must give notice of and/or hold its annual general meeting, for instance where it is stated that the annual general meeting must be held by the end of April;
- the extension of the deadline will be coordinated with the deadline for the company’s filing of its income tax return. For this purpose, the Minister of Taxation has announced that the tax filing deadline will be postponed to 1 September 2020.
At present, listed companies must file their annual report by 30 April and unlisted companies by 31 May, provided that their financial year is the calendar year. If the Bill is passed and the deadline is extended by 3 months, the deadline will instead be 31 July for listed companies and 31 August for unlisted companies. See below for further information on listed companies’ filing of annual reports with Nasdaq Copenhagen.
Which companies will be covered?
The exemption introduced in the Bill will be available to all companies and branches regulated by the Business Authority or the Financial Supervisory Authority. Based on our understanding, the Bill therefore covers all commercial enterprises and their branches.
It is expected that the new act will be adopted this Thursday, 2 April. The rules will enter into force upon the issue of an Executive Order and may be stated to have effect as far back as 1 March 2020. By implementing the rules with retroactive effect, it is ensured that all companies which need an exemption to be able to depart from provisions in their articles of association stating when the annual general meeting must be held can benefit from them, including companies that have already cancelled/postponed their general meeting.
Kromann Reumert monitors the situation and will issue an update when the Executive Order is issued as expected.
The new Act is an emergency act that will be repealed on 1 January 2021.
Deadlines for listed companies according to Nasdaq's issuer rules
According to Nasdaq Copenhagen’s current Issuer Rules, listed companies must publish their annual report within 3 months after expiry of the financial year. If this time limit is exceeded, Nasdaq Copenhagen may issue a reprimand, charge a fee or - in aggravating circumstances - delist the company’s securities. With effect from 1 May 2020, new Issuer Rules will enter into force. Nasdaq Copenhagen has, in cooperation with Nasdaq Iceland, Nasdaq Helsinki and Nasdaq Stockholm, drawn up common rules for issuers of shares on the regulated market. After the implementation of the new rules, the deadline for publishing the annual report will be 4 months after expiry of the financial year - the same deadline that applies under the Financial Statements Act and the Capital Markets Act. Nasdaq Copenhagen has not announced any extension of the deadline in connection with the change of the rules, and based on our discussions with Nasdaq Copenhagen, there are no plans to take such step neither. The reason is that Nasdaq’s deadline concerns the date of publication of the financial statements - not the date of presentation of the annual report as approved by the general meeting - which reduces the need for an extension.
Kromann Reumert has set up a COVID-19 Task Force consisting of specialists, who are ready to assist you and your business in all matters related to COVID-19.