The Finnish Government has submitted a legislative proposal (the “Act”) allowing annual general meetings held in 2020 to be postponed until 30 September 2020. In addition, listed companies could allow shareholders to participate in AGM 2020 only by way of representation or technical means.
The Act has been prepared in response to the COVID-19 outbreak, and its purpose is to give listed companies sufficient time to adopt technical measures required to arrange fully remote meetings. The Act will also apply to companies listed on the First North market. The Act will enter into force as soon as the Parliament passes it and will apply to AGMs convened at the earliest on 30 April 2020 and held at the latest on 30 September 2020.
Postponement of AGM 2020
According to the Act, AGMs following the financial period ended between 30 September 2019 and 31 March 2020 may be postponed until 30 September 2020. The proposed extension, therefore, allows listed companies to deviate from the statutory provision requiring that the AGM must be held within six months of the end of the financial period. Further, deadlines set out for the preparation, approval and registration of financial statements and related audits are consequently extended.
Remote participation in AGM 2020
The Board of Directors of a listed company will have the right to decide that AGM 2020 is held remotely. This means that shareholders would be able to participate only by way of proxy representation or by post, telecommunications or other technical means. Until now, the Companies Act has required that shareholders must always have a right to physically participate in the general meeting, even if remote participation has been possible. However, the Act will temporarily lift this requirement.
How are shareholder rights secured in remote AGMs?
The Act introduces certain requirements intended to ensure that shareholder rights are adequately upheld in remotely held AGMs. If the Board of Directors has decided that only remote participation will be possible, the notice to the AGM must specify:
- The main contents of resolution proposals and, if necessary, an alternative proposal to distribute dividend amounting to minority dividend as set out in the Companies Act;
- A reasonable time period set out for shareholders’ questions and counter-proposals and the timing of the responses from the board as well as the website where the questions, responses and counter-proposals can be reviewed before the AGM and the deadline for voting;
- Details of proxy representatives nominated by the company;
- A reasonable time period set out for advance voting (if any); and
- Details on how meeting officials are appointed and the register of votes adopted.
In order to streamline remote AGMs, only shareholders who own at a minimum of one (1) % of all shares in the company will have a right to submit in advance resolution proposals and counter-proposals for vote at the AGM. Shareholders with a lower share may present questions and proposals as instructed before the AGM. These as well as related answers are to be published at the company’s website.
How to prepare?
Once the Act takes effect, listed companies have greater flexibility in deciding how the current restrictions and guidelines on gatherings and movement are accommodated to ensure shareholder safety at AGM 2020. Possible new alternatives include:
- AGM with all shareholders participating and voting in real-time over a virtual meeting application or video conference service;
- AGM with all shareholders participating online, but with possibility to submit votes in advance by post or electronically;
- AGM where all shareholders are represented by proxy representatives, who participate either in person or remotely.
If an AGM with physical participants is held while the restrictions on gatherings remain in force, companies should remember to observe the 10 person limitation as well as take measures necessary to minimize infection risk, such as separation of shareholders and other AGM participants into smaller rooms.
To ensure efficient remote shareholder participation, companies are required to ensure that shareholders are provided with sufficiently detailed voting instructions as well as access to proxy representatives and secure technical solutions.
We believe that virtual AGMs may eventually become permanently introduced into Finnish corporate practice.
We are actively monitoring the fast-changing legislative developments resulting from the COVID-19 outbreak, and would be pleased to discuss any questions that you may have regarding its legal implications.