The Commission has launched a public consultation on proposals to facilitate the exercise of basic shareholders’ rights in company general meetings and to resolve problems in the cross-border exercise of such rights, particularly voting rights. One of the issues raised is whether investors should be allowed to vote electronically and by post.
The Commission is also seeking views as to whether ‘share blocking’ requirements that prohibit trading ahead of shareholder meetings should be prohibited.
This process can discourage shareholders from exercising their voting rights.
The public consultation on the proposals is open until December 16th.
The main issues on which the Commission is seeking contributions are:
The scope – listed companies only?
The Commission is considering whether the proposal should only apply to listed companies, while clearly giving the possibility to Member States to apply the same facilities to non-listed companies.
Entitlement to control the voting right.
The entitlement to vote usually accrues to shareholders. There are, however, instances where investors in shares do not become shareholders of companies they invest into. This is particularly acute in cross-border investments, where shareholders invest in shares through chains of securities intermediaries. A solution, therefore, has to be designed for shareholders’rights and intermediaries’ obligations, so as to determine the entitlement of the ultimate investor to control the voting right and decide how the votes attaching to his shares should be cast. The Commission is considering whether a system should be designed at EU level which would address this critical issue.
Dissemination of information pre - General Meeting.
Investors can only make well-informed decisions if they are provided with all the relevant materials in a timely fashion. The Commission is therefore considering whether the forthcoming proposal should contain provisions regarding the disclosure of the General Meeting notice and accompanying documentation, and some standards for the dissemination of information.
Admission to and participation in General Meetings.
It is increasingly recognised that share blocking requirements as a condition to participate in a vote at the GM are considered overly restrictive and reduce the ability of shareholders to participate in the vote effectively. The Commission is considering whether the forthcoming proposal should prevent such requirements and whether an alternative system such as a record date system should be set at EU level.
Shareholders’ rights in relation to the General Meeting.
Legal requirements or restrictions on the right to ask questions, to submit proposals for decision- making or to vote in absentia often prevent small shareholders from being active. The Commission considers that the exercise of such rights should be facilitated by the establishment of minimum standards at EU level and by allowing voting in absentia, in particular by electronic means.
Dissemination of information post- General Meeting.
Shareholders also face some difficulties in receiving the results of the votes and the minutes of the discussions, including answers to questions asked by shareholders. Another difficulty lies in the absence of any confirmation that their votes have been executed as instructed. The Commission is considering whether an obligation should be put on companies to disseminate the results of the vote or to confirm, at shareholders’ request, the execution of vote instructions.
Interested parties are invited to identify any additional issues which in their view should be addressed by the forthcoming proposal for a Directive to enhance shareholders’ rights, and may have been omitted in this consultation document.
TEL: +32 (0)2.296 75 37
FAX: +32 (0)2.299 85 34
The consultation paper is available at: http://ec.europa.eu/internal_market/company/shareholders/index_en.htm