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Annual Shareholders‘ Meeting 2020

Peculiarities of convocation of Shareholder‘s Meetings, Supervisory Board and Board meetings, participation in them and formalization of decisions taken under quarantine conditions.

Please find below the information on the preparation for the annual General Shareholders’ Meeting and decisions which are required or recommended to be adopted during the meeting, as well as peculiarities of convocation of General Shareholders’ Meeting, Supervisory Board and Board meetings, participation in them and formalization of decisions taken under quarantine conditions.

Convening the General Shareholders’ Meeting

The Annual General Shareholders’ Meeting (hereinafter – the “Shareholders’ Meeting”) must be held each year within at least 4 months after the end of the financial year of public or private limited liability company (hereinafter – the “Company”). Thus, if the financial year of the Company coincides with the calendar year, the Shareholders’ Meeting, where the annual financial statements for FY 2018 shall be approved, has to take place by 30 April 2019. Shareholders must be informed about the upcoming Shareholders’ Meeting not later than 21 days before the meeting, except if longer terms are provided in Company’s Articles of Association. Consequently, this year a notice of the convening of the Shareholder’s meeting has to be issued no later than 9 April. The above indicated terms can be not followed if all shareholders will give a consent under the signature.

Decisions of the Shareholders’ Meeting

The Shareholders’ Meeting has to approve the annual financial statements of the Company and to distribute the profit (loss), as well as to get acquainted with the annual report prepared by the Managing Director, except for the cases when the Company is exempted from this obligation. If an audit of annual financial statements is mandatory under the laws or Articles of Association of the Company, the Shareholders’ Meeting may approve only the audited financial statements.

Shareholders’ Meeting may adopt other decisions as well, such as decision on approval of a new wording of Articles of Association, election of board members, increase/reduction of the share capital, election of audit company for the following year, etc

Members of the Board/Supervisory Board

The Board/Supervisory Board performs its functions for the period established by the Articles of Association of the Company or until the new Board/Supervisory Board is elected and start to act, however, no longer than until the Shareholders’ Meeting takes place in the last year of the tenure of the Board/Supervisory Board. We recommend verifying, whether authorizations of the members of the Board/Supervisory Board of your Company are not expiring this year, and adopting appropriate decisions, if necessary.

Annual Financial Statements

Managing Director is responsible for preparation of the Annual Financial Statements of the Company. If the Board is formed in the Company, it analyses and evaluates the Annual Financial Statements, as well as, the draft proposal on profit (loss) distribution and submits these documents for approval to the Shareholders’ Meeting (prior to the Supervisory Board, if it is formed).

In case the audit of the Annual Financial Statements is not required by the Articles of Association of the Company, the statutory audit has to be performed if at least two indicators exceed the following limits on the last day of the financial year:

  • net turnover during the reported financial year exceeds EUR 3,500,000;
  • the value of the assets reported in the balance sheet is above EUR 1,800,000
  • the average number of the employees during the reported financial year exceeds 50 persons

The audit of the Annual Financial Statements is also compulsory for private limited liability companies, whose shareholder is the state and/or municipality, and for all public limited liability companies.

Profit or loss distribution

When distributing profit or loss it is important to remember that dividends may be allocated and paid provided that all of the following conditions are satisfied:

  • a company has no outstanding obligations which ought to have been discharged prior to the adoption of the decision; 
  • the aggregate of profit/loss of the reporting financial year available for distribution is positive (profit has been earned);
  • the equity capital of the Company is higher or upon payment of dividends would not become lower than the aggregate amount of the capital of the Company, the legal reserve, the revaluation reserve and the reserve for acquisition of its own shares; 
  • a company has paid all the taxes prescribed by laws within the established time limits; 
  • mandatory deductions to the legal reserve have been made.

If shareholders were paid interim dividends for the period shorter that the financial year, the sum of such interim dividends has to be indicated separately in the decision of the Shareholder’s Meeting. Please also be reminded that, a Company must pay allocated dividends not later than within one month from the day of the adoption of the decision.

If during the financial year losses were incurred, following a decision of the shareholders, they may be covered by transfers from reserves, share premiums or shareholders’ contributions. Also, please note that, if the equity capital is not restored to the amount equal to 1/2 of the share capital indicated in the Articles of Association, the law sets the requirement for the Shareholders’ Meeting to decide on the reduction of the share capital, the restructuring of the company or the liquidation of the Company.

Participation in the Meeting, voting and formalization of decision under the quarantine conditions

Taking into account the spread of COVID-19 virus and the limitations and recommendations to the activities of private sector set by the Government of Republic of Lithuania under the Decision No 207 as of 14 March 2020 it is advisable to avoid physical attendance of the meetings by usage of distance communication means, ensuring voting by written voting ballots and signing of decisions with electronic signature.

Additional requirements for remote attendance at meetings may be provided (or such possibility might be restricted) restricted by the Company's Articles of Association, Shareholders' Agreements and other documents regulating the activities of shareholders and members of the management bodies. That is why it is necessary to evaluate these documents individually or to consult with a lawyer. It should be noted that the requirements and restrictions for the use of electronic means of communication for the organization of meetings and voting remotely may be applied only to the extent that they are necessary for the identification and security of the information transmitted and are proportionate to achieving these objectives.

In practice, the most common way to organise remote voting is through filling general voting ballots and signing them by ordinary or electronic signature. General voting ballots signed by a regular signature should be sent to the Company by mail, and the ones signed with electronic signature should be sent to the Company's predetermined email address. The signed general voting ballot must reach the Company no later than the beginning of the meeting (otherwise the decisions of the shareholder indicated in such voting ballot will not be included in the voting results). In any case, the law obliges the Company to indicate the procedure of participation and voting in the shareholders 'meeting by electronic means in the notice on convening the shareholders' meeting.

Where there is a sole shareholder, the decisions of the General Meeting of Shareholders may also be formalized by a written decision of this sole shareholder.

Note: This summary is compiled for informational purposes only and cannot be treated as binding advice.

 

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited („DTTL“), its global network of member firms or their related entities (collectively, the “Deloitte organization”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.

No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms, and their related entities, are legally separate and independent entities.

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