Springtime is usually a busy period for executive boards and boards of directors as most municipal companies are required to hold annual general meetings and file annual reports with the Danish Business Authority before the end of May.
When preparing and conducting general meetings in municipal companies, we are often faced with questions which recur in several companies and municipalities. The purpose of this article is to provide a general answer to some of these questions. Please note that, irrespective of what is stated below, the general meeting must always be held in accordance with the articles of association of the individual company.

1. The general meeting

The general meeting exercises the ultimate authority over the company. All owners are entitled to vote at the general meeting. At the general meeting, each owner holds one vote. A resolution deciding how a municipality which is (co-)owner of a public limited company is to vote at the general meeting is typically passed before the general meeting and according to the rules applicable under the Local Government Act. In municipal companies, the role as owner will normally be undertaken by the finance committee or the municipal council. The municipal council may authorise the mayor to safeguard the interests of the municipality at the general meeting. If there are questions of an unusual character or significant importance, e.g. a merger, conclusion of new long-term cooperation agreements or the like, the matter will often have to be submitted to the municipal council.

2. Shareholders' agreements

In companies with several owners, a shareholders' agreement is often entered into where the owners lay down provisions on their mutual relationship. This also applies to municipal companies with several owners. A shareholders' agreement typically implies that the owners are to vote in a certain way at the general meeting; e.g. vote for the candidates recommended by the other owners. However, a shareholders' agreement is only binding as between the owners but not the company. This means that the chairman of the general meeting is not to ensure that the shareholders' agreement is observed at the general meeting. The provisions which the owners wish to be certain are enforced at the general meeting should therefore - if they concern a matter under the articles of association - be incorporated into the articles of association. 

3. Notice

The board of directors is responsible for convening and arranging general meetings. In practice, the task is often performed by the executive board. According to the Companies Act, general meetings must be convened by at least two weeks' and no more than four weeks' notice. However, the owner(s) may agree to depart from these notices. It is often necessary to depart from the requirement for maximum four weeks' notice to have sufficient time for the political consideration prior to the general meeting. To ensure that the political consideration of the issues at the general meeting may take place at the ordinary meetings in committees and the municipal council, it may be an advantage to make a yearly schedule stipulating the date of the general meeting and the deadlines for the company's submission of material. Deadlines for submission of material for approval of e.g. rates may also be incorporated. This ensures that the matters are received in due time to be considered at the ordinary meetings.

4. Proposals from the owners

An owner is entitled to have a specific matter included in the agenda for the general meeting if the owner makes such request to the board of directors no later than six weeks before the general meeting. If the board of directors receives the request later than six weeks before the general meeting, the board shall decide whether the matter may be included in the agenda. However, matters not included in the agenda may be resolved by the general meeting if all owners agree.
In municipal companies with one owner these deadlines are without practical importance as the municipality, as sole owner, may decide to depart from the deadline. If there are several municipal owners, the factor deciding whether the matter may be considered at the general meeting will typically be whether all municipalities have had the opportunity to consider the proposals at the meeting of the municipal council or the finance committee before the general meeting and to authorise the party representing the municipality.

5. Items on the agenda

The agenda (at the annual general meeting) must be consistent with the items on the agenda which are listed in the company's articles of association. If the board of directors is not up for election each year (e.g. because the election term of the board of directors follows the municipal election term), this may appear from the articles of association, and the item may be left out in the other years.

6. Location

General meetings must be held at the registered office of the company, unless the articles of association prescribe that the general meeting is to be held at another location. In special circumstances, the owners may decide to hold the general meeting elsewhere.

In many companies, a so-called "papirgeneralforsamling" is held - also referred to as "skrivebordsgeneralforsamling" (a general meeting held without the attendance of the company’s shareholders/owners). This means that the general meeting is not held as a physical meeting but that the authorisations granted are collected and counted and minutes are prepared accordingly. As the municipal council or the committee has determined in advance how the municipality is to vote at the general meeting, it may be a practical and effective model. If the general meeting is held without physical attendance, the owner(s) will receive a copy of the minutes confirming the resolutions.

7. Third-party access

The board of directors may decide that third parties may be present at the general meeting. This applies even if a resolution has not been passed at the general meeting in advance and even if the third parties' identity is not known by the company. However, the articles of association may prescribe otherwise. In municipal companies, it is not unusual that the aggregate municipal council and perhaps the company's consumers are invited to participate in the general meeting. However, there should not be a general obligation in the company's articles of association to hold open general meetings as this will prevent the owners from holding the general meeting without the attendance of the owners ("papirgeneralforsamling").

8. Chairman of the meeting

Unless otherwise prescribed by the articles of association, the general meeting will elect a chairman. The chairman is not required to be independent of the company or the like. When the general meeting is held with physical attendance, we recommend, however, that it is not a member of the board of director or the executive board who serves as chairman as they may be asked to answer (critical) questions from the owners - or others, e.g. attending consumers.

9. Right to speak

If the general meeting is conducted with the owners' physical attendance, all owners are entitled to attend and speak at the general meeting. As the individual owner speaks with one vote, it will typically be the mayor or another representative of the municipality who presents the municipality's views at the general meeting and votes on behalf of the municipality. Under the rules of the Companies Act, it is not possible for the full municipal council or the finance committee to present different views in the municipal council/the finance committee. This means that all resolutions at the general meeting in a company owned by one municipality are passed with 100 % of the votes, whether there was agreement in the committee/the municipal council or not. 

10. Answering questions

The management must at the general meeting disclose all information and answer all questions from the owner to be resolved at the general meeting. This may be e.g. information necessary for assessing the annual report and the company's position. However, the duty of disclosure does not apply if the board of directors is of the opinion that it may be detrimental to the company to disclose the information or that it is information which is not directly available. This may be of importance when considering whether the public is to obtain access to the general meeting. All companies which are more than 75 % publicly owned are covered by the Act on public access to documents in public files, and information made available at the general meeting will therefore generally be available to the public to the extent rendered in minutes of general meetings etc.

11. Voting rights

All shares are generally entitled to vote. As mentioned, each owner holds one vote. This also means that the individual owner votes (in the same way) with his full voting share. In a company with several owners and where there is only one share class, the individual owner's votes reflect the owner's share of the shares in the company.

12. Majority

All resolutions at the general meeting are passed by a simple majority of votes. In case of equality of votes, the proposal is not adopted. In case of equality of votes in an election of persons, the election is decided by lot, unless otherwise prescribed by the articles of association.

Under the Companies Act, there are increased requirements for the majority for certain resolutions, e.g. the adoption of an amendment to the articles of association where 2/3 of the votes must be in favour of the resolution. An increased requirement may also be prescribed by the articles of association.

The owners may decide in the articles of association that other resolutions are also to be decided by a qualified majority or carried unanimously. This may be in case of e.g. resolutions on sale of parts of the company's business, the admission of new owners or the purchase of shares in new companies or enterprises. In municipally owned companies, there are typically special requirements for resolutions that may affect the municipalities' credit facilities or cause a set-off against the block grant.

13. Election of board members

The board of directors is generally composed of members elected at the general meeting, i.e. by the owners. In addition, the articles of association or legislation may lay down special rules on the composition of the board, e.g. requirements for members elected by the employees or members elected by the consumers.

In municipal companies, candidates to be elected for the board of directors at the general meeting are typically nominated in connection with the constitution, and the election term is typically the municipal election term. In that case, no election of board members will take place at the general meeting in the intervening years.

14. Minutes

When the general meeting has been held, the minute taker will send resolution minutes to the chairman for approval, who will subsequently sign the minutes.


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