What Options Do Companies Have for This Spring’s General Meetings?

Preparations for this spring’s general meetings are already well under way in many listed companies. The fact that no one knows for sure what the COVID-19 situation will be in the spring adds an additional twist to preparations this time around.

However, it doesn’t take a fortune teller to make a prediction: the larger the company and the earlier in the spring the general meeting is planned to be held, the more likely it is that the company will have to make some kind of remote participation arrangements.

This time around, the situation is not catching companies by surprise like last year, and it is reasonable to expect both companies and shareholders to be better prepared. For companies this means that shareholders must be provided with up-to-date means of participation. Shareholders in turn can be expected to actively make use of these means.

Like last spring, this spring will be a good opportunity to gather experiences of different meeting arrangements. It is likely that the Limited Liability Companies Act will be amended at some point to permanently provide companies with more options for arranging their general meetings. However, it is too early to say when that will happen and what the final contents of such a reform would look like.

Three Alternatives

Companies have three main alternatives for arranging their general meetings this spring. The key difference is the extent to which the meeting is held remotely:

In this connection, it is worth noting that in the case of general meetings, remote participation does not necessarily mean that all attendees would participate in the meeting using their own computers from wherever they happen to be. While it would be possible to organise this kind of real-time participation, no listed company has done so to our knowledge. In most cases, remote participation has been organised through advance voting.

Is Dialogue Possible Remotely?

Listed companies should not count on all of their shareholders being able to participate in person this spring – at least not if the general meeting is being planned for the beginning of the general meeting season. Most companies will probably choose between a hybrid meeting and a fully remote meeting. The temporary legislation allowing stock exchange listed companies and First North companies to hold remote meetings will likely only be in force until the end of next June.

A key part of traditional general meetings is the dialogue between shareholders and the company’s management. It is important to give some thought to how to enable this dialogue when planning a remote meeting, particularly if the general meeting is being organised as a ‘paper meeting’, i.e. solely based on advance voting. One option worth considering is holding an entirely separate event for dialogue.

Keep Your Options Open

Depending on how the meeting is being organised, it is clear that planning a general meeting in the middle of a pandemic is a balancing act between shareholder rights on the one hand and the health and safety of shareholders and other stakeholders on the other.

This year has made it clear that the COVID-19 situation and the related restrictions and recommendations can change very quickly. Companies would be wise to monitor the situation closely and keep their options open for as long as possible.

When it comes time to send out the notices convening the general meeting, it is important to clearly communicate the different ways of participating and what they mean in practice to the shareholders.