On 1 December, the Swedish Parliament resolved on the delayed legislative amendments to the Swedish Companies Act which, among other things, concern the mode of convening general meetings, on which we reported in previous newsletters (October 2009 and June 2010). The new rules take effect on 1 January 2011. The amendments are brought about by directive 2007/36/EC of the European Parliament and of the Council on the exercise of certain rights of shareholders in listed companies, which should have been implemented no later than 3 August 2009.

Relative to the original proposal, the scope of application for the new rules has been broadened so that public companies other than those listed on a regulated market (in Sweden NASDAQ OMX or NGM Equity), or a corresponding market outside the EEA (below referred to as "Listed Companies") are afforded the opportunity to use the new rules on the mode of convening general meetings. This will result in considerable savings for these companies, which will no longer have to advertise the notice to attend in a national daily newspaper. Below, a summary of the new rules is set forth.

Convening general meetings

Mode of convening general meetings

The amendment means that Listed Companies no longer need to convene general meetings by advertising in a national daily newspaper. Under the new rules, general meetings in Listed Companies will be convened by advertisement in Post- och Inrikes Tidningar and by making the notice to attend available on the company's website. Listed Companies must also provide notification that the notice to attend has been issued using a national daily newspaper specified in their articles of association and provide certain information to the shareholders regarding the coming general meeting, inter alia how they may access the complete notice to attend on the company's website.

However, the entire notice to attend does not have to be published in the newspaper. Finally, Listed Companies are obliged to send the notice to attend to every shareholder who so requires at no cost to the shareholder.

In the committee's proposal, only Listed Companies were subject to the new rules on convening general meetings on the company's website. After several commenting bodies had aired criticism, the scope of application was expanded, so that all public companies are now afforded the opportunity to convene general meetings in accordance with the rules which apply to Listed Companies.

In order to be able to use the opportunity to convene general meetings in accordance with the new rules, the companies in question must insert a new provision in the articles of association which states that notice to attend is to be issued in accordance with the new rules.

Public companies, which are not Listed Companies, but which nevertheless choose to convene general meetings in accordance with the new rules, must also, by and large, follow the rules regarding the provision of documents prior to the general meetings and the content of the notice to attend which apply to Listed Companies.

Time for convening extraordinary general meetings

Under the rules existing hitherto, notice of extraordinary general meetings, which are not to resolve on amendments to the articles of association, must be made no later than two weeks prior to the meeting. For Listed Companies, the time is now increased to three weeks prior to the meeting. However, this amendment does not affect other limited companies, regardless of whether they are public limited companies which choose to convene general meetings in the manner prescribed for Listed Companies.

Content of the notice to attend

The Companies Act already permits electronic voting and, provided that a special provision has been inserted in the articles of association, that a company collects proxies. Now an opportunity for companies to insert a provision on voting by mail into their articles of association has been introduced. In the event any of these possibilities are used, the company must set out, in the notice to attend, the manner in which a shareholder is to proceed in order to vote by using such a proxy which the company collects and to vote per mail or by electronic means.

The notice to attend general meetings in Listed Companies must contain information regarding the shareholders' right to request information at the meeting. Further, the notice to attend must, for these companies, contain information regarding the company's holding of its own shares. The information in the notice to attend regarding the number of shares and votes in the company and holding of its own shares must refer to the circumstances at the time of issuing the notice to attend. If there are several classes of shares, the information must be divided in accordance with the different classes. In the notice to attend, Listed Companies must refer to the website where the company provides the documents which will be presented at the general meeting and, as applicable, proxy forms and forms for voting by mail. The provisions just mentioned will also – to a certain extent – apply to public companies which are not Listed Companies, but which choose to convene general meetings in the manner prescribed for Listed Companies.

Provision of documents prior to the general meeting

Until now, the Companies Act has required that documents which are to be presented at the general meeting are made available to the shareholders no later than two weeks before the meeting. This time is now extended so that Listed Companies, no later than three weeks prior to the general meeting, must keep available at the company's website inter alia, the documents which are to be presented at the general meeting, proxy forms and forms for voting by mail.

These provisions will also partly be applicable to public companies which are not Listed Companies, but which choose to convene general meetings in the manner prescribed for Listed Companies.

Right to participate at general meetings of VPC companies

Hitherto, VPC companies have been able to have a special provision purporting that a record date, which determines which shareholders are entitled to participate in a general meeting, could fall less than five days prior to the meeting. This option is now removed, which means that the record day is always the fifth weekday prior to the meeting for all VPC companies.

Proxies at general meetings in VPC companies

Hitherto, a shareholder has only been able to have one proxy representing all shares at a general meeting. In order to make life easier, first and foremost, for institutional shareholders, which often have their shareholdings divided between several managers, rules are now introduced which allow shareholders in VPC companies to exercise their right at the general meeting by two or more proxies. Each proxy may exercise the same rights, inter alia, voting rights, which relate to the portion of the shares which the proxy represents at the meeting.

Validity of proxies in VPC companies

Under chapter 7 section 3 of the Companies Act, a power of attorney to exercise a shareholder's rights at a general meeting must not be valid for more than one year from the date of issuance. In order to make life easier, especially for institutional foreign owners, a provision has now been introduced which means that proxies to represent a shareholder at general meetings in a VPC company may be valid up to five years after the issuing.

Voting by mail and collection of proxies

The new provisions enable companies to specify in their articles that shareholders will be able to exercise their voting right by mail or that the board of directors, prior to a general meeting, may decide that the shareholders will be so allowed.

Hence, the company can choose that shareholders shall always have the right to exercise their voting rights by mail or to leave it to the board of directors, before each general meeting, to decide whether that possibility will be offered the shareholders.

The procedure of collecting proxies which is arranged by the company has been somewhat simplified, in that the requirements of as to the information the proxy must contain is a little lower.

Reporting of the outcome of voting in Listed Companies

In order to meet requirements in the directive, provisions have been introduced which mean that Listed Companies, at the request of a shareholder, must report details of the outcome of a voting which has taken place at the general meeting. Information about the voting result must be reported in the minutes of the general meeting or in an appendix thereto. The minutes, excepting the voting register, must be made available on the company's website no later than two weeks after the general meeting and must be available at the company's website for no less than three years.

Provisional provisions

The new provisions take effect 1 January 2011 and entail amendments to the articles of association for Listed Companies. Under the provisional provisions, amendments to the articles of association, to which the legislative amendments may give rise, must be made at the first general meeting after 1 January 2011. Notice to that general meeting must be made under the old rules. However, many Listed Companies have already adopted new provisions regarding the manner of convening general meetings and have made them conditional upon amendments having been introduced to the Companies Act and that the provisions in the articles of association correspond to the new rules.

Listed Companies which have introduced such provisions and have registered the articles of association may convene the general meeting in question in accordance with the new rules, regardless of the provisional provisions stating that notice must be issued under the old rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.