The government’s proposal to minimise the number of physical participants at general meetings
Covid-19 makes it difficult for shareholders and members to attend annual general meetings in limited liability companies and other legal forms of association. Shareholders might belong to a risk group or having difficulties to travel to the place where the meeting is held. A limited liability company or association may not refrain from holding the annual general meeting or to postpone further than the last permitted date (six months after the end of the financial year). Thus, the Government is proposing a temporary legislation for the purpose of facilitating the general meetings and for shareholders and members to attend without having to attend physically.
In short, the proposal means that
- All limited liability companies are allowed to use proxy collection (Sw: fullmaktsnsamling) (i.e. where a specific person is stated as a representative in a proxy provided to the shareholders) and postal voting (Sw: postomröstning), even though it is not regulated in the articles of association or that information on proxy collection and/or postal voting is included in the notice to the general meeting;
- A special proxy form or postal voting form must be made available on the company’s website or sent to the shareholders no later than one week before the meeting; and
- The company must provide information on how the shareholders may exercise their voting rights, either on the website, e-mail and/or post.
Corresponding provisions are proposed for, inter alia, economic associations, tenant-owner associations (Sw: bostadsrättsföreningar) and companies on the financial market.
The proposal is expected to be submitted to Parliament for decision in early April. The new legislation is proposed to enter into force on April 15 and expire at the end of 2020. However, the proposal allows the company to take the measures covered by the temporary legislation already before April 15, provided that the general meeting takes place when the legislation enter into force at the earliest.
Companies that choose to use either proxy collection or postal voting on the basis of the proposed legislation should note that the temporary rules only give companies an opportunity to limit the number of shareholders present and thus do not limit the shareholder’s rights at the general meeting.
When applying postal voting, the increased administrative measures as well as the costs thereof must also be noted. In Delphi’s opinion, providing of a blank proxy form and information on the opportunity to give proxy to a certain person, such as the chairman of the meeting, and the possibility to include a voting instruction, or providing of a pre-printed proxy form where a representative is appointed, fulfil the shareholders’ opportunity to attend from distance.
For our previous articles on covid-19 and general meetings, please see Q&A – arbetsrätt, bolagsrätt och IT-avtal (Swedish), Delphi insights: Covid-19 – legal aspects and Company law and capital market aspects of covid-19.