General Meetings in Empty Halls
This spring will see the first ever general meetings held by listed companies without a single shareholder or shareholder’s representative, proxy or assistant being present. A temporary act entered into force in Finland at the start of May (Act 290/2020) allows listed companies to, in practice, prevent shareholders or their representatives from attending general meetings in person.
Remote Participation or Proxy Participation – Or Both
Under the temporary act, listed companies can organise their general meetings solely through remote participation in such a way that ‘shareholders can exercise their rights in the general meeting in the manner provided for in chapter 5(16)(2) of the Limited Liability Companies Act only by post, telecommunication link or other technological means’. It seems most likely that this kind of remote participation will be organised through advance voting in which the votes are collected either through an online service or an advance voting form. If so, it is worth paying particular attention to the clarity of the voting form and the instructions for advance voting.
A second exceptional alternative offered by the temporary act is for shareholders to exercise their rights at the general meeting solely through a proxy representative. In this alternative, shareholders are always entitled to pick their own proxies, and the company cannot obligate shareholders to use a proxy appointed by the company. This means that the number of people present at the meeting cannot be entirely controlled.
In many of the cases where the new alternatives provided by the temporary act will be used, it is likely that the more common option will be remote participation or a combination of the two alternatives so that proxy representative are only allowed to participate remotely.
Shareholder Rights Must be Secured in Advance
Using the new alternatives provided by the temporary act requires that shareholders are able to exercise their rights to ask questions and make proposals before the meeting. After publishing the notice convening the general meeting, shareholders must be given a few days to make counterproposals. Counterproposals must be put to a vote if the shareholder making the counterproposal holds more than one one-hundredth of the shares in the company. A separate deadline must be set for submitting other counterproposals and shareholder questions. Other counterproposals, shareholder questions and the management’s responses to questions must be published prior to the end of advance voting or the general meeting.
It is worth noting that in all items where there is only one proposed resolution, the voting options must be yes or no. This also applies to the election of the board of directors and other similar resolutions that normally cannot be opposed without submitting a counterproposal. This being the case, it is important that companies make sure that at least the key proposals have sufficient support amongst the shareholders prior to the meeting. If not, the company risks winding up in a situation in which no resolution is made and a new general meeting may have to be convened.
In addition to listed companies, many of the options provided by the temporary act are also available to First North companies, i.e. companies who have issued shares that are traded on a multilateral trading facility.
Traditional General Meetings Also Possible
The above new forms of general meeting have already been used by many companies. Processing counterproposals and advance questions does, of course, cause a fair amount of work for the company, but a great deal of work is saved due to not having to take precautionary measures at the meeting venue to avoid infection.
Despite the temporary act, it is still possible for listed companies and First North companies to organise ‘traditional’ general meetings. As mentioned above, this does require that arrangements be made to account for the coronavirus situation.
In addition to the special arrangements it makes available to listed companies and First North companies, the temporary act also allows companies to postpone their general meetings to the end of September, regardless of the deadlines set by the Limited Liability Companies Act or their articles of association. The temporary act also extends the deadline for completing financial statements to the end of June.