Extension of filing deadlines for annual reports ‒ update
The Bill to extend the deadline for filing of annual reports that was dealt with in our news article of 1 April has now been passed, and below is an update on the new rules. The Minister of Industry, Business and Financial Affairs has issued two Executive Orders allowing businesses to temporarily depart from their filing obligations. The Executive Orders should be seen in light of the situation that many businesses are currently facing due to COVID-19. This news article summaries the new deadlines, etc.
Extended deadline for filing of annual report
The deadline for filing of the annual report will be extended by three months
Specifically, businesses whose financial year ends in the period from 31 October 2019 to 30 April 2020 are allowed eight months after the financial year-end to file, while listed companies are allowed seven months.
Businesses that are regulated by the Financial Supervisory Authority must file their annual report for the 2019 financial year by 31 July 2020.
The extended deadline is also available to branches of foreign companies.
Furthermore, the Executive Orders also take into consideration that the current ban on gatherings of more than 10 people may not be lifted in time for the general meeting to be held and the annual report filed before 31 July or 31 August (as the case may be). Thus, businesses may - notwithstanding the seven- and eight-month time limits - file their annual report within eight weeks after lifting of the ban if it is not possible to hold the general meeting in time for the annual report to be filed by 31 July or 31 August without violating the ban. In order to file under this provision, the business must notify the Business Authority and, if applicable, the Financial Supervisory Authority.
Notwithstanding the new deadlines, businesses must still file their annual report without undue delay after adoption by the general meeting.
Deadline for filing of half-year and interim reports
It was stated in the explanatory notes to the Bill that the deadlines for filing of half-year and interim reports were also likely to be extended. However, the Executive Orders do not grant exemption from the deadlines for filing of half-year and interim reports, but since these reports are not subject to shareholder approval or audit obligations, the need for an exemption is not too pressing either. Furthermore, the need for transparency about listed companies is the same as before the COVID-19 crisis. In order to keep information flowing to the stock market, we therefore agree with the decision not to extend the deadlines for listed companies’ presentation of their half-year and interim reports.
Departure from provisions in the articles of association
As a natural consequence of the extended filing deadlines, the management may also depart from any provisions in the articles of association stating when the company must give notice of and/or hold its annual general meeting, for instance a stipulation that the general meeting must be held by the end of April. Such departure is possible only if the provision was included in the articles of association on or before 1 March 2020.
Furthermore, listed companies will be allowed to depart from the eight-week time limit for giving notice of the annual general meeting and the six-week time limit for shareholders to have specific proposals included on the agenda of the annual general meeting, provided that the shareholders have had reasonable access to have proposals included on the agenda. Where, for the avoidance of doubt, a listed company has given notice of an annual general meeting that is cancelled and then gives notice of a new annual general meeting, the “reasonable access” requirement is deemed satisfied. It is stated in the Executive Order issued in the financial area that it is for the board of directors to decide if the shareholders have had reasonable access to have items included on the agenda.
General meeting by electronic means
The new rules also introduce the possibility of holding a fully electronic general meeting even if not approved in advance by the general meeting and stated in the articles of association. The other provisions in the Companies Act governing fully electronic general meetings also apply to businneses regulated by the Danish Business Authority (such as banks and insurance companies), including the requirement that the notice of the meeting must include relevant information about this and specify how shareholders may register for electronic meetings.
In the financial area, it is stated that the same option is available to mutual associations, multi-employer occupational pension funds, cooperative savings banks, general savings banks, investment associations, and SIKAVs (variable capital investment companies).
Businesses falling within the scope of the orders
The Executive Orders apply to all businesses and branches that are regulated by the Danish Business Authority and the Financial Supervisory Authority, i.e. all Danish commercial enterprises and branches of foreign enterprises.
Extended deadline for adoption of mergers and demergers, etc.
Generally, the deadline for adopting a proposed merger or demerger plan follows the deadline for the participating companies’ filing of their annual reports.
It should be noted, however, that the deadline for adopting mergers and demergers has not merely been extended by three months. Instead, the deadline has been extended to eight weeks after lifting of the ban on gatherings. This also applies to cross-border mergers, demergers and relocation of registered office (subject to adjustments, as applicable)
In practice, it means that if the ban on gatherings is lifted e.g. on 15 April 2020, a merger or demerger which is to take effect for accounting purposes from 1 January 2019 must be adopted no later than 10 June 2020 , while the deadline for filing of the 2019 annual report is 31 August 2020 (in the case of unlisted companies).
The Executive Orders also include separate rules on resumption of businesses that are subject to insolvency proceedings etc. Finally, the deadlines for changing financial year have been extended in line with the deadlines for filing of the an-nual report.
Both Executive Orders enter into force on 8 April 2020.
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.