On account of risk of infection with the coronavirus covid-19, the Companies Registration Office is getting a great deal of questions about shareholders’ meetings and general meetings of associations with a large number of participants. Here we try to answer the most frequently asked questions about holding shareholders’ meetings at this time.
What is said below about the forms for shareholders’ meetings in limited companies also applies to annual general meetings and extraordinary general meetings of members of economic associations and tenant-owner associations. (The rules about late filing penalties do not apply to economic associations and tenant-owner associations.)
Can we hold a shareholders’ meeting without the shareholders being present in person?
A shareholders’ meeting is a meeting of the shareholders in a company at which they have the right to make decisions about the company’s affairs. It is important that the summons to a shareholders’ meeting is done correctly, i.e. at the right time and in the right way. Supporting information has to be produced before the meeting, and time must be given for discussions before decisions are made. The main rule is that the shareholders’ meeting has to be held where the board of directors has its registered office. It is possible to disregard the formal requirements for a shareholders’ meeting concerning the summons and the place of the meeting if all shareholders in the company agree to do so.
It is permissible to hold a shareholders’ meeting by telephone, video conference, Skype and the like. In that case, the meeting has to be led from the locality where the board of directors has its registered office unless the articles of association provide otherwise. In addition, the shareholders’ meeting has to agree that all or some shareholders take part in that way.
Shareholders’ meetings can also be held by correspondence [per capsulam]. This means that the decisions at the meeting are made without the shareholders gathering in person at a meeting. The decisions have to be documented in writing. For the Companies Registration Office to accept such a decision as a basis for registration, everyone who was entitled to take part in the decision has to sign it. This way of making decisions is best suited to simple and unanimous decisions and is therefore generally difficult to put into effect in limited companies with many shareholders. Especially in the case of companies with hundreds of shareholders someone is likely to want to discuss a question. This is another reason why it is not possible to use the correspondence alternative in companies with many shareholders.
When must the shareholders’ meeting be held?
The annual general meeting of shareholders must be held by law and it has to take place within six months after the end of the financial year. An extraordinary general meeting of shareholders has to be held if the board of directors considers there is reason to do so, and it can be held at any time at all during the year.
The board of directors also has to convene an extraordinary general meeting of shareholders if an auditor in the company or owners of at least one tenth of all the shares in the company request this in writing to deal with a particular question.
Can a company cancel a shareholders’ meeting?
It is not permissible to cancel an annual general meeting completely. However, the annual general meeting can be held later. But the annual general meeting must still be held within six months from the end of the financial year.
An extraordinary general meeting can also be held later. It can also be cancelled completely. It is up to the company to decide.
What does a company risk if its shareholders’ meeting is not held at the right time?
If a planned extraordinary general meeting is cancelled, the company risks not being able to make and carry out the decisions the meeting was intended to deal with. Here it is up to the company to consider what disadvantages may result from cancelling or postponing a shareholders’ meeting.
The same applies to an annual general meeting. In this case, the company also risks breaking the legal requirement to hold an annual general meeting within six months from the end of the financial year.
At the annual general meeting the board of directors must present the annual report and, where relevant, the auditor’s report. That general meeting has to make decisions on adopting the profit and loss statement and balance sheet and on how to appropriate the result, i.e. the profit or loss, and deal with the question of discharging the board of directors and the managing director from liability. If this is not done, it will not be possible to register the annual report with the Companies Registration Office either. In that case, the company also risks having to pay late filing penalties. Not preparing an annual report time is also an accounting offence for which the board of directors can be prosecuted.
Can a limited company get an extension of time to hold a general meeting?
No, at the Companies Registration Office we are obliged to follow the legislation that applies to limited companies, e.g. the Swedish Companies Act and the Annual Accounts Act, when we process cases. As there are no provisions about extensions of times in the legislation, we are not going to make decisions granting extensions of times.
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