1. A brief introduction, newly introduced rules & regulations
In the context of the difficult, evolving state of affairs in connection with the COVID-19 pandemic, many firms are currently faced with unprecedented legal issues regarding the accounting and auditing processes in their organisations. As a result, a lot of efforts have been put forward to adopt the manner of which business is conducted in a productive and efficient manner.
As you might have predicted, this affects a large number of upcoming general meetings in listed companies. Many firms are currently tasked with organizing board conferences, board meetings and, of course, the annual general meeting. The newly introduced measures cover the annual general meeting of shareholders, conferences and corporate meetings in regard to the assembling, filing, and signing monetary and financial statements.
In this blog post, we will provide you with the main things you need to keep in mind when conducting your annual general meeting this year, some practical guidelines and how can Penneo help.
2. The annual general meeting
The annual general meeting must be held at such a date that allows enough time for the annual report to be submitted to the Danish Business Authority within four months of the end of the financial year; i.e. by Thursday, 30 April 2020 at the latest for companies using the calendar year as the financial year.
If the time limit is exceeded, the Danish Business Authority may impose daily or weekly fines on the members of the board of directors and may lastly compulsorily dissolve the company. However, those regulation were later during March relaxed and The Danish government has made it possible for some companies to postpone their annual general meeting if they meet the following requirements:
The company hasn’t been able to hold its annual general meeting, where the annual financial report was reviewed.
The number of shareholders/participants in the annual general meetings exceed the limit of 10 people.
The company was unable to hold the annual general meeting because the articles of association do not provide the opportunity to do so.
The Danish Government has therefore reacted quickly to the effects of the pandemic and decided on special regulations for convening and holding general meetings in the current year. These are intended to help listed companies to continue to act and make decisions.
The new regulations, which should simplify the implementation of an online general meeting, include the following key points:
Image and sound transmission of the entire annual general meeting
The opportunity to digitally exercise voting rights and authorization (or by postal vote)
Possibility to ask questions by electronic communication (or by submitting questions beforehand)
The notice period can be reduced from 30 to 21 days
Annual general meetings must take place within the financial year (previously within 8 months)
As you might have predicted the biggest challenge that auditors and accountants are being faced with is a shift from analogue to digital…everything! We have dedicated the next 2 sections to exploring how companies have started adapting to the new normal and how Penneo can speed up the digital transformation process.
3. Adapting to the new normal with Penneo
As a consequence of the above newly introduced rules and regulations, we recommend taking the following actions in the context of the Covid-19 quarantine and the annual general meeting:
– Make reference to the Regulation in the preamble of your board decisions;
– If you plan to postpone a general meeting, or hold it in different circumstances than usual, inform the shareholders that these measures are exceptionally permitted by law (the Regulation);
– When possible, take advantage of digital transaction management tools to facilitate the handling of all the corporate documents.
However, we are aware that there is a lot of work put forward even before the annual general meeting begins and that this period is also highly affected by the coronavirus. In normal times the collection of all relevant documents and statements to compile the annual financial report is hard on its own and it has become even more challenging now. The importance of collaboration, teamwork, focus and motivation has raised significantly since almost all of the company is now working remotely. However, now that we are practising social distancing, we don’t really have any other option other than turning to digital solutions.
When it comes to conducting business remotely and at the same time preparing the annual financial report and the annual general meeting there are a few things that Penneo can do to make your accountant’s life a little bit easier. Let’s start from the basics:
A. Having your documents all in one place, stored securely
Many people overlook the importance of introducing an organisational system for their documents and end up storing them in piles in random rooms, having no idea where a specific report might be. It is crucially important, pandemic or not, to store your documents in one place, where they can be easily found and accessed by you and your team. And what better place than with Penneo on the cloud?
B. The ability to collaborate, to make authorized changes and to detect unauthorized ones
Effective digital collaboration and teamwork is crucial during this lockdown. The channel of communication between marketing, finances and management must be held open throughout the whole preparation period of the annual financial report so that it can be finalised by the deadline. However, email is definitely not the right tool to use when, I assure you, there will be tons of small and big changes that will pop up each day and, in the end, going through a kilometre-long tread of emails can be exhausting. Rather, Penneo allows you to make comments and execute changes right in the document itself. This will not only save you time and nerves but will also provide you with visibility of the changes made and overall transparency. After a document is done with any unauthorized changes will be detected, so that you can easily check the validity and reliability of the document.
C. Sending the annual report to the right people in the right order
After all of the documents have been compiled and all attachments and appendices added it is time to send it for signature and approval. Most companies sign the documents at the annual general meeting itself, which was never actually optimal. In normal times it takes precious time away from the participants and more often than not the order in which you are legally obliged to sign the documents is not respected. A better and more efficient way is to sign the documents digitally prior to the meeting. Penneo allows you to create a custom signature flow that the document can follow and Penneo makes sure that the document reaches the right people in the right order. The best part? You can see exactly at what time each signee signed thanks to the digital time stamp, which ultimately ensures the reliability and compliance of the document.
D. Setting up real-time tracking and reminders
Once you send out the documents, the last thing you want to do is to worry if the third party has received, opened or signed them. We certainly do not need more uncertainty and stress in our lives at the moment, so Penneo real-time tracking and email notifications for signature definitely bring peace to a troubled mind and ensure you get your documents on time.
E. Compliance, legality & data security
To remain compliant, you must be in line with KYC, AMP & GDPR regulations to say the least. That means that each time you sign a document for signature, the identity of the signer needs to be verified and you must do your due diligence in regard to the Anti Money Laundering Act. After a document has been signed by the right person, protecting the data of your employees, shareholders and clients are crucial for maintaining a healthy business relationship and ensuring your business is safe from the hands of hackers.
F. Receiving back the annual financial statement and encrypting it
After you have received back the annual report, Penneo will store it safely and securely on the cloud and, of course, encrypt it so that all data is under key and the only people who could view the document are the ones that are authorised to do so.
And we have come full circle. From here you know the drill- you store your documents in one place, where they can be found and accessed and the whole process begins anew.
This year’s annual general meetings will for sure prove themselves to be challenging. However digital transformation is nothing new to our society as it has been around for a decade or so. We believe that embracing digital transformation can benefit companies not only in the short-run but in the long-run as well. Implementing a digital transaction management solution will save you hours of worries and will automate almost all of your annual general meeting related processes. So why not give it a shot? All you have to lose is that huge pile of documents and countless hours of administrative work.
We hope that this blog post has helped you in your preparation for the upcoming general meeting and we are looking forward to seeing if this digital way of conducting annual general meetings will become the permanent alternative for all businesses.