EC Launches Consultation On Shareholder Rights

by Ulrika Lomas, for LawAndTax-News.com, Brussels

20 September 2004

The European Commission on Thursday launched a public consultation on facilitating the exercise of basic shareholders’ rights in company general meetings, and solving problems in the cross-border exercise of such rights, particularly voting rights.

Explaining the reasoning behind the consultation, Internal Market Commissioner, Frits Bolkestein stated that:

"Shareholders need to be able to ensure that management is acting in the best interests of the company. To do so, they need access to appropriate information and to effective ways of exercising real influence. Making sure shareholders can exercise their rights will help spread cross-border investing and integrate EU capital markets."

He continued:

"If we want the extra growth that will result from that, we need to say ‘goodbye’ to opacity and communication from the age of the carrier pigeon and ‘good morning’ to modern, electronic, transparent information systems that result in real rights being exercised. So I encourage all interested parties - companies, individual and institutional shareholders and regulators - to respond. We will listen.”

Issues on which the EC is inviting responses from interested parties include:

• The entitlement to control the voting right - investors in shares are often not recognised as shareholders, particularly in cross-border situations, and are in practice deprived of their right to vote as they wish;
• The dissemination of information before the general meeting and the possible need for minimum standards to ensure that all shareholders, irrespective of where they live, get information in time;
• The criteria for participation in general meetings, and the removal of overly cumbersome criteria, such as share blocking requirements;
• Possible minimum standards for the rights to ask questions and table resolutions;
• Possible measures to enable shareholders to vote by post, electronically, or by proxy; and
• The dissemination of information following the general meeting and the possible need for confirmation that votes have been executed.

Responses are invited by December 16, and will be taken into account in a forthcoming proposal for a Directive, as part of the Commission's Action Plan on Corporate Governance.

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