The impact of the coronavirus on the organisation of general meetings and board meetings in limited companies and public limited companies, and the distribution of dividends

Pursuant to Sections 5-8 and 6-19 of the Norwegian Companies Act and Sections 5-9 and 6-19 of the Norwegian Public Limited Liability Companies Act, board meetings and general meetings must in principle be held as physical meetings. The infection control measures that have been introduced to prevent and reduce the spread of the coronavirus may make it difficult or impossible to hold physical meetings. To remedy such situations and other situations where physical meetings are difficult to hold, the Articles of Association and the Articles of Association state that board meetings and general meetings may be held without physical meetings under certain conditions. In such cases, meetings may be held by telephone or video conferencing, for example.  

Board meetings 

As a starting point, the board of directors may deal with matters in forms other than physical meetings if the chairman of the board finds that the matter can be dealt with in a satisfactory manner through written proceedings or other satisfactory forms, cf. Asl. § 6-19 and asal. § 6-19.  

Board meetings can therefore be held by telephone or video conferencing. The advantage of physical meetings is that all board members can have their say and that it creates a good framework for exchanging opinions. Particularly where the board consists of many members, a telephone meeting may be a less reassuring form of meeting. This is particularly because there may be a poor telephone connection and a poorer framework for the exchange of views.  

When assessing which meeting format the board meeting should be held in, the nature of the matter must also be considered. If the matter to be discussed is a trivial issue, it will be easier to consider a telephone/video meeting to be a satisfactory form of meeting, rather than where a complex business transfer is to be considered.  

Whenever non-physical board meetings are held, the minutes should state that the appropriateness of the meeting format has been assessed. 

Annual general meeting 

Unless otherwise stated in the company's articles of association, both the Asl. and Asal. allow general meetings, regardless of whether it is an ordinary or extraordinary general meeting, to be held either as a physical meeting where some of the shareholders participate electronically, or as a purely electronic meeting. In order for an electronic general meeting to be legal, there is a requirement for proper case management. It is particularly important that the shareholders' right to speak and vote is safeguarded even if the meeting is held electronically. Furthermore, electronic participation and voting must be checked. For example, it may happen that a shareholder's internet connection fails just as the video meeting is about to begin. In such a case, the general meeting should either be postponed for a few hours until the internet connection is restored or allow the shareholder to participate in other appropriate meetings, such as by e-mail or telephone. It is also the case that adequate authentication controls must be used to ensure that the right participants take part, rather than unauthorised persons.  

The notice of the general meeting must state that the meeting will be held electronically and how the procedure for electronic participation will occur.  

A shareholder who wishes to physically attend the general meeting cannot in principle be denied this. However, the company may possibly refuse such physical participation due to the extraordinary situation we find ourselves in. Such a refusal presupposes that it is possible to participate through electronic participation.  

To a certain extent, the board is authorised to postpone ordinary general meetings. If the board of directors has already sent out the notice of the general meeting, the notice may be cancelled if there are objective reasons for the cancellation. On a general basis, it can be assumed that the impact of the corona virus on the business community and the initiated infection control measures can be regarded as legitimate reasons. Normally, a general meeting cannot be cancelled if the shareholders are present in the meeting room. However, the extensive impact of the coronavirus may be such an extraordinary situation that the general meeting may be cancelled, even if the shareholders are present in the meeting room.  

If the date of the general meeting is publicly published, the board of directors must publicly announce any change to the date as soon as the decision has been adopted by the board. The holding of the general meeting can probably be postponed until after the deadline in the Companies Act. However, the Accounting Act's absolute deadlines for the adoption of the annual accounts must be complied with.  

Dividend distribution in brief 

Dividends are distributed at annual general meetings. As a result of the impact of the coronavirus on Norway's business community, and hence its possible indirect impact on companies' liquidity, the board's duty to assess the justifiability of the distribution of dividends pursuant to Asl. § Section 8-1 fourth paragraph and Asal. § Section 8-1 fourth paragraph, will be of great importance. This applies even if the shareholders may have a legitimate expectation of a dividend.  

As several companies are likely to have a demanding liquidity situation, it may be appropriate for the board to propose a postponement of the distribution of dividends, rather than a distribution that could strain an already demanding liquidity situation.