When municipal companies are going to prepare and conduct general meetings in the spring, we are asked a lot of questions, and many of these are also asked by companies and municipalities. The purpose of this article is to provide a general answer to some of these questions. Remember that a general meeting must always be held in accordance with the company's articles of association.
1. The general meeting
The general meeting exercises the ultimate authority over the company. All owners are entitled to participate in the general meeting. At the general meeting, each owner holds one vote. A resolution as to how a municipality which is (co-)owner of a public limited company will 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 municipal council or the finance committee. 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, entering new, long-term cooperation 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 have laid 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 in relation to some questions - e.g. vote for the candidates recommended by the other owners. A shareholders' agreement is only binding as between the owners, but not for 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 want 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. Convening of general meetings
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 deviate from these notices. It is often necessary to deviate from the requirement for maximum four weeks' notice in order to have 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 e.g. submission of material for approval of rates may also be incorporated.
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 deviate 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 authorise the party representing the municipality. Also in this respect, it will be relevant that the owners agree to extent this notice out of consideration for the political policy-making processes.
5. Items on the agenda
The agenda (at the annual general meeting) must follow 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 will appear from the articles of association, and the item may be left out in the other years.
6. Where to hold the general meeting
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 many companies, a so-called "papirgeneralforsamling" is held - also referred to as "skrivebordsgeneralforsamling", which means a general meeting held without the participation 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 at the general meeting. However, it may be inappropriate to have 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 participation of the owners ("papirgeneralforsamling").
8. Chairman of the meeting
The general meeting will elect a chairman. It is not required that the chairman must 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 individual members or for instance a minority of the municipal council or the finance committee to present minority views from 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, irrespective of whether there was agreement about the municipality's vote during the political hearing.
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 shareholders hold voting rights. 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.
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 for 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. In the articles of association, the owners may lay down an increased requirement for adoption of some decisions. The owners may e.g. decide 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' articles of association, 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.
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.