The outbreak of the coronavirus disease has had a significant impact on people and businesses. The situation has also raised questions about the possibility of physical attendance at upcoming AGMs. Due to new temporary legislation and new instructions regarding the interpretation of the Swedish Corporate Governance Code, as well as the authorities’ updated recommendations, Vinge publishes this update regarding companies' alternatives for the upcoming AGMs.
Even though an AGM is not formally covered by the government's ban on public gatherings (maximum 50 persons), the ban should, as far as possible, continue to be complied with. The ban must be seen in light of its overall purpose to prevent the spread of infection and should be regarded as indicative of what is appropriate. According to the general advices published by the Swedish Public Health Authority, measures must be taken to prevent the spread of infection and therefore meetings should, if possible, be postponed if the meeting requires participants to meet physically or, as another alternative, be carried through digitally. This also applies to companies and associations that organize general meetings. Other measures to prevent the spread of infection may be to mark distances on the floor where queues are formed and to offer the possibility of hand washing with soap and water.
It is worth noting that companies are required under the Swedish Companies Act to hold their AGM for approval of the annual accounts for 2019 by 30 June 2020 at the latest. Postponing the AGM until late June may be an option to consider for some companies.
The Swedish Parliament has today, April 3, 2020, decided to adopt a temporary law amendment to reduce the number of physical participants at general meetings. The law amendment allows the Board of Directors, without prescription in the articles of association, to carry out advance voting (so-called postal voting where votes are submitted in advance to the company through mail/e-mail) and proxy collection (where the company prefills who will act as proxy). The regulation comes into force on April 15, 2020 and applies to general meetings that take place after the entry into force, regardless of the date of notice. For further information on how companies should proceed with advance voting or proxy collection, contact your ordinary Vinge contact or any of the capital markets specialists listed below.
In light of the reduction of the meeting restriction to 50 persons and the Swedish Public Health Authority’s latest instructions, the Confederation of Swedish Enterprise has this week asked the government to take an initiative for another temporary law amendment that would allow the Board of Directors to decide that advance voting is compulsory, i.e. in practice that the general meeting is conducted entirely without physical attendance. If the government announces such a change, it may be relevant for the companies to postpone the AGM to a time when such new rules have entered into force.
The Swedish Corporate Governance Code (the "Code") contains requirements regarding advance notice of the date of the AGM (paragraph 1.1), the attendance of members of the Board of Directors at the AGM and other general meetings (paragraph 1.2) and the preparation of a proposal for chairman at the AGM (paragraph 1.3). Due to the measures taken to limit the ongoing spread of infection, the Swedish Corporate Governance Board (the "Board") has decided that the three provisions in the Code stated above do not need to be complied with in the prevailing circumstances, which means that it does not constitute any deviation from the Code to not comply with the abovementioned three rules. These special applications apply throughout the full year of 2020.
It is worth noting that the Board's special applications do not affect the duty of the Board of Directors and the CEO to be prepared and able to provide information to the shareholders and make necessary decisions at the AGM.
In addition to the above, listed companies should continue, as far as possible, to take appropriate measures to prevent the spread of infection by limiting the number of physical participants at the AGM. Proposed measures include announcing that neither food nor refreshments will be served at the AGM and that the CEO's speech be cancelled or greatly reduced. Companies can also choose to broadcast the AGM via video link or to make the CEO speech available to shareholders on their website.
For further information on how you as a company should proceed when utilizing the possibility of advance voting or proxy collection as described above, or in the case of other questions about how you should act in the best way regarding your upcoming AGM, contact your ordinary Vinge contact or any of the capital markets specialists listed below.
Jesper Schönbeck, Partner
Charlotte Levin, Partner
Erik Sjöman, Partner
Dain Hård Nevonen, Partner
David Andersson, Partner