What is a general meeting?
Whether you are the CEO, financial controller or bookkeeper in a company, the general meeting is an important milestone in the business’s annual cycle. It is here that central decisions are made and the annual report approved before submission to the Danish Business Authority. But what are the actual rules for convening, agenda and quorum? And what are the risks if the requirements are not met?
In this blog post, we guide you through the most important rules and requirements relating to the holding of an ordinary general meeting in capital companies – from preparation and convening to minute-taking and notification.
What is a general meeting?
A general meeting is the company's supreme governing body, where the owners make key decisions such as approving the annual report and amending the company's articles of association. It must be held at least once a year and is regulated by the Companies Act in Denmark. Decisions must comply with the legislation to be valid.
Before convening the general meeting
If the company has a board of directors, board minutes must be prepared in which the board proposes the annual report for approval at the general meeting and presents any proposal for dividend. The board must also decide which items the agenda for the general meeting should include. However, the items set out in the articles of association must, as a minimum, be included in the agenda. If the company has no board of directors, the executive management fulfils this task.
Convening the general meeting
Deadline for convening
To ensure the general meeting is valid, you must give timely notice. If a deadline is stated in your articles of association, it applies. If no deadline is specified, notice must be sent 2–4 weeks before the meeting is held. The deadline in your articles of association must not be shorter than two weeks.
The general meeting must be held no later than six months after the end of the company’s financial year. This is because the annual report must be approved at a general meeting and subsequently submitted to the Danish Business Authority within this deadline.
Contents of the notice, including the agenda
The notice must include information on where and when the general meeting will be held, together with the agenda specifying what will be dealt with. If one of the proposals involves a change to the articles of association, the notice must include a description of the essential elements of the proposal.
If one of the following situations applies, the proposal must be described in full text:
- You are holding the general meeting electronically, without the possibility of physical attendance (Companies Act § 77, subsection 2)
- You are using electronic document exchange (Companies Act § 92, subsections 1 and 5)
- The change to the articles of association increases the shareholders’ obligations towards the company, or the change requires 9/10 of both the votes cast and the company capital represented at the general meeting to approve the proposal under law (Companies Act § 107, subsections 1 and 2).
Minimum items on the agenda
1 – Appointment of chair
Before the general meeting can begin making decisions, a chair must be appointed. Unless the articles of association state otherwise, the general meeting elects the chair. If the articles do not specify who shall or may be chair, the meeting may choose freely. It is recommended that the board proposes a candidate to ensure that one can be elected and that this person has had time to familiarise themselves with the company’s articles, etc.
The chair’s duty is to manage the general meeting and ensure it is held in accordance with the rules. The chair must also sign the front page of the annual report as approved at the meeting but is not responsible for the content of the report itself.
2 – Approval of the annual report
The general meeting must approve the company’s annual report before submission to the Danish Business Authority. The deadline for submission, as mentioned above, is six months after the end of the financial year. It may be advisable to hold the general meeting slightly before this deadline to allow time for submission, especially if there is any uncertainty about whether the annual report or proposed dividend will be approved.
3 – Decision on allocation of profit
If the company has generated a profit, it may be paid out as dividends or transferred to equity (including retained earnings). To pay dividends, the company must not have accumulated losses from previous years – these must first be covered. The dividend may not exceed what the company’s governing body proposed in the notice to the general meeting or what the governing body can vouch for.
Management must also ensure that the company retains a sufficient liquidity buffer after distribution and payment of dividends.
If there is a loss, it must be transferred to equity. If this results in at least half of the share capital being lost, management must explain the company’s financial position at the general meeting and, if necessary, propose actions to resolve the situation or recommend dissolution.
4 – Waiver of audit
If your company is subject to audit and nothing else is specified in the articles of association, the auditor must be elected or re-elected at the general meeting. Companies subject to audit may opt out for the next annual report if they meet the conditions to do so.
This decision must be made at an ordinary general meeting, and the articles of association must be updated accordingly. To opt out of audit, the company must, for two consecutive years, not exceed two of the following three thresholds:
- Turnover of DKK 8 million
- Balance sheet total of DKK 4 million
- 12 employees, calculated as an average number of full-time employees.
It does not have to be the same two thresholds that are not exceeded for two consecutive years.
These companies are not able to opt out of their auditing responsibilities
Entrepreneurial foundations are always subject to audit and may not opt out.
For holding companies that do not exceed these thresholds, further assessment is required before it can be determined whether the conditions for opting out are met.
Companies in certain risk-prone sectors, such as restaurants, pizzerias and car dealerships, are subject to special rules. These companies must have their annual accounts accompanied by either a statement from an independent auditor on assistance with preparation or an auditor’s opinion with assurance if turnover exceeds DKK 5 million in two consecutive financial years.
Other potential agenda items
Change of share capital
If you wish to change your share capital, this must be decided at a general meeting. A capital increase may be made by cash, other assets or conversion of debt. Certain rules must be observed, including consideration of existing shareholders’ pre-emptive rights and the requirement for a valuation report if assets other than cash are contributed.
In a capital reduction, you must (in most cases) invite the company’s creditors to submit claims within four weeks, with the invitation sent within two weeks of the decision.
Language of the annual report
If you wish to change the language of the annual report from Danish to English or vice versa, this must be decided at the general meeting, and the articles of association must be updated. The decision may apply to the annual report approved at the same meeting if the language change is handled earlier on the agenda.
If management is uncertain whether the change will be approved, it is advisable to prepare the annual report in both languages.
Election of board of directors and management
If your company has a board or supervisory board, some or all members must be elected or re-elected at the general meeting, as set out in the articles of association. If the articles stipulate that the general meeting elects executive management, this must also be on the agenda.
Changes to the articles of association
All amendments to the articles of association must be approved at a general meeting. In addition to those already mentioned, this may include changes to signing rules or the number of board members and directors.
Any other business
You may include “Any other business”, where participants may discuss topics not on the agenda. However, decisions under this item require unanimous approval by all shareholders. Otherwise, an extraordinary general meeting must be convened to address the topic.
After the general meeting
After the general meeting, minutes must be prepared. If changes to management, board or auditor have been approved, you must notify the Danish Business Authority. This also applies to amendments to the articles of association, such as a change of language in the annual report, change of financial year or waiver of audit.
The annual report approved at the general meeting must be submitted electronically to the Danish Business Authority.
Need advice?
If you need advice or assistance in connection with your general meeting, Azets has a large team of experts in corporate law ready to help.
