12 tips for preparing and conducting a general meeting

When municipally owned limited liability companies have to prepare for and conduct general meetings, we encounter a number of recurring questions. We have therefore gathered the 12 most important and frequently asked questions in this article. Remember that the general meeting must always be held in accordance with the legislation that applies to the specific company and each company's articles of association.

1. The role of the general meeting

The general meeting is the company's ultimate authority and the place where owners can exercise their influence. All owners have the right to attend the general meeting.

The decision on how a municipality that is (co-)owner of a company will vote at the general meeting is typically made before the general meeting according to the rules of the Local Government Act. The finance committee or the municipal council usually represents the municipality's ownership interests. The agenda and appendices for the general meeting are thus processed by the finance committee and possibly the municipal council before the general meeting, and here it is decided how the municipality's representative (often the mayor) will vote at the general meeting. The municipality's position on each item is determined by a simple majority, and the municipality votes "with one vote" at the general meeting. Minority views from the political process are thus not reflected in the voting at the general meeting.

In principle, there is nothing to prevent the municipal council or the Finance Committee from giving the administration a general mandate to attend "uncomplicated" general meetings. However, in the case of issues of an unusual nature or of great importance, such as mergers or entering into new, long-term partnerships, it is assumed that there is a prohibition on delegation, which means that the matter must be presented to the municipal council.

2. Notice of general meeting

The board of directors is responsible for convening and organising the general meeting. In practice, however, it is often the executive management that takes care of the practicalities on behalf of the board.

Notice must be given at least 2 weeks and no more than 4 weeks in advance. Due to the special deadline calculation rules in the Danish Companies Act, the deadline is calculated from the day before the general meeting. This means that the 2-week deadline should be read as 2 weeks + 1 day. If you wish to hold a general meeting on 31 December, you must have sent out the notice no later than 16 December.

However, the owners can deviate from the deadlines if they agree - and this is typically necessary to allow time for political presentation. To ensure that the political processing of the topics at the general meeting can take place at the regular meetings of committees and the municipal council, it is a good idea to draw up an annual plan that includes the date of the general meeting and the company's deadline for sending material to the municipality.

3. Proposals from the owners

Every owner has the right to have an item included on the agenda of the general meeting. In limited liability companies, the owner must request this from the board of directors no later than six weeks before the general meeting. If the board of directors receives a request to have an item dealt with later, the board of directors decides whether the item can be included on the agenda. Matters not on the agenda can only be decided by the general meeting if all owners agree.

4. Agenda items

The agenda of the annual general meeting must, as a minimum, include the agenda items listed in the Danish Companies Act and in the company's articles of association. This includes the approval of the annual report and often also the election of board members. If the board of directors is not up for election every year - for example, because the board's term of office follows the municipal term of office - this is stated in the articles of association and the item can be omitted at the general meeting in the other years.

5. Locality

The general meeting must be held at the company's registered office, unless the articles of association stipulate that it must or may be held at another specified place or if the owners agree otherwise.

In many companies, the general meeting is conducted as a so-called "written general meeting". This means that the general meeting is not conducted as a physical meeting, but that the management or a lawyer prepares minutes with the decisions the owners wish to make, which are then signed by representatives of the owners. Since the municipal council or committee has already decided how the municipality will vote at the general meeting, this can be a practical and efficient model.

6. Access for outsiders

In municipally owned companies, the general rule is that only the owners and the company's management have access to the general meeting. However, the board may decide that outsiders may attend the general meeting, unless the articles of association stipulate otherwise. In municipally owned companies, it is not unusual for the entire municipal council and possibly the company's consumers to be invited to attend the general meeting. We recommend that a general obligation to hold open general meetings is not included in the company's articles of association, among other things because it would deprive the owners of the opportunity to conduct the general meeting as a written general meeting.

7. Chairperson of the meeting

The general meeting elects a chairperson of the meeting, unless the articles of association stipulate otherwise. The task of the chairperson is to chair the general meeting, including voting.

There is no requirement for the chairperson to be independent of the company or the owners. However, when the general meeting is conducted as a physical general meeting, we recommend that it is not a member of the management who chairs the meeting, as the management may be asked to answer (critical) questions from, for example, the owners or consumers in attendance, and the chairperson may be in a difficult dual role.

8. Speaking rights

If the general meeting is conducted with the physical presence of the owners, all owners have the right to attend the general meeting and speak. Since each 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.

9. Answering questions

At the general meeting, management must provide information on all matters and answer all owners' questions relating to matters to be decided at the general meeting. This may, for example, be information that is necessary for the assessment of the annual report and the company's position in general.

However, the duty of disclosure does not apply if the board of directors considers that providing the information may cause significant harm to the company or if the information is not immediately available. This may be important when considering whether the public should have access to the general meeting. However, all companies that are more than 75 per cent publicly owned are covered by the rules on access to documents, and much of the company's information will therefore generally be subject to access to documents, including because it is shared with the owners in connection with the general meeting.

10. Voting rights

In general, all shares have voting rights. Since each owner speaks with one vote, each owner votes (in the same way) with their entire voting share. Any prior disagreement in the municipal council will therefore not be reflected in the minutes of the general meeting.

11. Decision-making majority

Most decisions at the general meeting are usually made by a simple majority of votes. If the votes are tied, the proposal will lapse. If the votes are tied in the election of persons, the election must be decided by drawing lots, unless the articles of association stipulate otherwise.

According to the Companies Act, there are stricter majority requirements for certain decisions. For example, a decision to amend the company's articles of association requires a 2/3 majority of votes. A stricter majority requirement can also follow from the articles of association. The owners can stipulate in the articles of association that certain decisions must be made by a qualified majority or even unanimously. Examples include decisions on the sale of parts of the company's business, the admission of new owners or the purchase of shares in new companies. In municipally owned companies, there are typically special requirements for decisions that may affect the individual municipality's influence in the company, the municipality's borrowing limits, or which may result in offsetting the municipality's block grant. It is therefore always a good idea to compare the agenda.

12 Shareholders' agreements

In companies with multiple owners, there is usually a shareholders' agreement where the owners have agreed on how they will act as owners.

For example, a shareholders' agreement will typically mean that the owners are obliged to vote in favour of the candidates nominated by the other owners for election to the board of directors. However, a shareholders' agreement is only binding on the owners in their mutual relationship and does not bind the company. The chairman of the general meeting is therefore not responsible for ensuring compliance with the shareholders' agreement. The provisions that the owners want to ensure are enforced at the general meeting should therefore - provided they are relevant to the articles of association - also be incorporated into the articles of association.