Covid impacts – General Meetings held by postal voting
This time of year is usually a time filled with appointments for those who enjoy attending General Meetings. General Meetings are usually an event where listed companies get the chance to meet their shareholders and present the company and the persons behind the company name. The last two years have however been different with a pandemic affecting the possibilities of gathering larger groups of people for events such as General Meetings.
Listed companies have a number of options to consider when preparing to summon to a General Meeting in these times. Today we will focus on the preferred option for many companies this year, the possibility to carry out a General Meeting by holding it solely by postal voting in accordance with the Act (2020:198) on Temporary Exemptions to Facilitate the Execution of General Meetings and Association Meetings in order to secure shareholder safety (the “Temporary Act”).
The Temporary Act was implemented at the start of the pandemic with the goal of facilitating the execution of General Meetings without a need to hold a physical meeting. The possibility to hold a General Meeting by postal voting has been present for a long time in the Swedish Companies Act but few companies had opted to implement the necessary wording in the Articles of Association that enables such option. When the pandemic hit the legislator early on foresaw a need for all companies to be able to use the option previously only available for a selected few companies.
With the implementation of the Temporary Act all companies were instantly able to carry out General Meetings in accordance with the applicable provisions of the Companies Act along with the Temporary Act. During the Annual General Meeting-season of 2020 a selected few early adopters chose to hold their Annual General Meetings solely by postal voting and successfully did so. The trend continued and this year, 2021, most of the listed companies have chosen to conduct their Annual General Meeting by postal voting.
General Meeting held by postal voting – what does it mean in practise?
For many it may seem strange that a General Meeting could actually be carried out without the occurrence of an actual physical “meeting”. However, this is just what is happening this year with support of the Temporary Act. Basically, a General Meeting held by postal voting is executed by the review of all postal votes received by the company and the accompanying summary of the outcomes of such voting. In practise, not even two persons need to meet in order to carry out a General Meeting held by postal voting.
As the postal vote is the carrier of a shareholder’s will to vote at the items on the agenda of a General Meeting it is naturally crucial that the voting form is of decent standard. It is also of importance that the identity of the voter and its authority to vote is confirmed in some way. In practise, a company has two options to handle postal voting: (i) by issuing physical voting forms that shareholders could fill in and send to the company by physical letter or by e-mail, or (ii) by providing a digital solution whereby the voting is done exclusively from a computer, a tablet or by phone.
Option (i) is used in many smaller private companies that does not have a larger amount of shareholders. The listed companies however, have a larger pool of shareholders and therefore stand the “risk” of having to handle a very large number of forms, which could prove practically hard to handle as it requires careful review and handling of each separate voting form. Therefore many listed companies have opted to use option (ii) where a digital platform streamlines both the voting and the review/summary of such votes. From experience, this option saves the companies both time and money, at least in listed companies where a larger amount of shareholders opt to vote. It also eliminates the risk of faulty summaries as all votes are accumulated automatically by the digital platform used in the process.
Are ”postal meetings” here to stay?
Many listed companies have this year chosen to propose the Annual General Meeting to adopt revised Articles of Associations whereby postal voting will be an option even after the pandemic is over. We do not foresee that the implementation of such option will mean that the Annual General Meetings of listed companies will be held by postal voting. Instead, it has become obvious during the last year that listed companies strongly want to hold the Annual General Meeting physically as it provides a good forum to inform shareholders about the company and its business, as well as its acts as a place for dynamic social contacts.
Our prediction is instead that the postal voting may be a preferred option in circumstances where an Extraordinary General Meeting with a limited agenda is required, as such meetings usually do not attract large interest and usually has a very low attendance rating. In such circumstances it would save the company time, effort and costs to carry out the General Meeting in a somewhat “simplified” way.
To summarize, the Temporary Act has filled a much needed role during the pandemic as it has allowed companies to facilitate General Meetings without risking to gather larger groups of shareholders. Especially, the digital solutions provided on the market has enabled listed companies to save time and costs while still assuring shareholders their right to vote. Most companies are very likely to get back to physical meetings after the pandemic but under certain circumstances, the continued possibility to carry out General Meetings by postal voting may still play a relevant role.
/MAQS law firm 2021-05-24