Tired of spending time attending general meetings? Or receiving notices for general meetings during the holidays or to places you normally don’t travel to? You can now demand electronic participation.
In the past, the board could decide that the shareholders could participate by electronic means (phone, Skype, etc.). The rules addressed a practical need and strengthened the shareholders’ legal standing. Pursuant to a legislative change in June 2017, you can now demand participation by electronic means, which further strengthens the shareholders’ opportunities to exercise their rights.
Electronic participation means that you, as a shareholder, can hear what is said (but not demand video conferencing), address the meeting, as well as vote. Your advisor also has the right to participate electronically. The Chairman of the Board and the General Manager must be present and do not have this right to electronic participation. The rules apply to physical general meetings, but not to general meetings that are fully electronic, which require that none of the shareholders oppose such a format.
The Board of Directors of the company may, under the Limited Liability Companies Act, refuse your electronic participation if there is “just cause” for such refusal. The starting point is still that the board has a duty to facilitate this, including acquisition of reliable systems to avoid that the right becomes an illusory one. There may still be just cause for refusal if the costs associated with the acquisition of the required systems are not reasonable, considering the company’s size, shareholder structure, or expenses and time spent on physical presence for shareholders.
Another reason to refuse electronic participation may be in the case of discussion of sensitive matters, since it is difficult to control who listens.
Electronic participation requires that the participation and voting take place in a secure manner. If this is not the case, electronic participation will be denied. This might be the case if a great number of shareholders want to participate electronically. Regardless, this does not alter the board’s obligation to facilitate electronic participation on a general basis.
During the actual implementation, the board, when sending the notice of the general meeting, must be able to require that the shareholders who wish to participate electronically, so state within a specific deadline. Correspondingly, the board must/should let the shareholders know, in the meeting notice, when it is not possible to participate electronically. The board’s decision may be overturned by the general meeting, as well as be subject of legal action. The articles of association may provide additional clarifications regarding electronic participation.
The articles of association may allow for voting prior to the physical general meeting. In other words, the board may not decide this on its own, nor may you a shareholder do so, unless it is established in the articles of association.
The above is based on the rules in the Limited Liability Companies Act. The Public Limited Liability Companies Act differs slightly from the Limited Liability Companies Act.