Criticism for late publishing of accounts – Two principled decisions from the financial supervisory authority

Date 11 dec. 2008
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In two rulings of 3 November 2008, the Danish Financial Supervisory Authority chose only to criticise two companies’ late publishing of an annual report and an interim financial statement. The decision has been presented to the Danish Securities Council. 

 

The cases in brief

In the ruling concerning the company publishing its annual report too late, cf. section 27(7) of the Danish Securities Trading Act, a company (“Company 1”) had released its annual report to the shareholders who were registered by name on 22 April 2008, eight days prior to the general meeting on 30 April 2008. The annual report was not published until 6 May 2008.

 

The annual report contained substantially the same information as the annual report statement published on 31 March 2008. At the time, Company 1 was not engaged in business activities.

 

In the ruling concerning a company publishing its interim financial report too late, cf. section 27(8) of the Danish Securities Trading Act, a company (“Company 2”) had published its interim report for the first half of 2008 three days after the expiry of the period allowed.

 

Rules applying to duty of disclosure

According to section 27(8) of the Danish Securities Trading Act, a company which is encompassed by the provision must publish its annual report no later than eight days prior to the general meeting.

 

According to section 27(8) of the Danish Securities Trading Act, companies with listed shares which do not publish quarterly reports must publish an interim report in the course of the first and the second half year. The report must be published at the earliest ten weeks after the beginning of the half-yearly period in question and at the latest six weeks after the expiry hereof.

 

The ruling

In the ruling from the Danish Financial Supervisory Authority of 3 November 2008, Company 1 had held a general meeting on 30 April 2008. The publication of the annual report on 6 May 2008, thus, took place six days too late.

 

The Danish Financial Supervisory Authority decided only to criticise the company, in that it did not engage in business activities at the time. Thus, there were no circumstances which suggested that Company 1 had attempted to withhold the publication of the annual report.

 

In the ruling concerning late publishing of an interim financial report, the Danish Financial Supervisory Authority decided only to criticise Company 2, since the delay only concerned a period of three days.

 

With its two decisions, the Danish Financial Supervisory Authority has determined that the Supervisory Authority may decide only to criticise companies publishing their annual reports or interim financial reports too late in cases which only concern a delay of a few days. If the annual report is published too late venial reasons therefore must exist, however.

 

As regards the late publishing of an annual report, the Danish Financial Supervisory Authority, thus, emphasises in its ruling the fact that Company 1 was not engaged in business activities at the time. Furthermore, the Danish Financial Supervisory Authority remarked that the annual report contained substantially the same information as the annual report statement which had been published prior to the general meeting. The circumstances thus indicated that the company had not attempted to withhold the publication of the report.

 

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If you have questions or require additional information on the duty of disclosure of companies admitted to trading on a regulated market, please contact attorney Dan Moalem (dmo@mwblaw.dk).

 

The above does not constitute legal counselling, and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.