McCreevy Unveils New Rules For Cross-Border Investment

by Robin Pilgrim, LawAndTax-News.com, London

11 January 2006

The European Commission on Tuesday presented a proposal for a Directive to facilitate the cross-border exercise of shareholders' rights in listed companies, through the introduction of minimum standards.

The proposed Directive seeks to ensure that shareholders, no matter where in the EU they reside, have timely access to complete information and simple means to exercise certain rights – notably voting rights – at a distance.

Internal Market and Services Commissioner Charlie McCreevy explained that:

“Shareholders need to be able to get relevant information on time and vote without encountering unnecessary obstacles, wherever they are in the EU. Otherwise they can't exercise their influence properly and make sure that management is acting in their best interests. Our proposals will introduce a range of key minimum standards to make this happen – using modern, reliable technology. All this will help to strengthen the role of shareholders and spread EU investing.”

After having carried out a comprehensive impact assessment, the Commission has proposed the following minimum standards which would eliminate the main obstacles in the cross-border voting process and enhance certain other rights of shareholders:

• General Meetings should be convened with at least one month's notice. All relevant information should be available on that date at the latest, and posted on the issuer's website. The meeting notice should contain all necessary information.
• Share blocking should be abolished and replaced by a record date which should be set no earlier than 30 days before the meeting.
• The right to ask questions should be accessible to non-residents. The maximum shareholding thresholds to benefit from the right to table resolutions should not exceed 5%, in order to open this right to a greater number of shareholders while preserving the good order of general meetings.
• Proxy voting should not be subject to excessive administrative requirements, nor should it be unduly restricted. Shareholders should have a choice of methods for distance voting.
• Voting results should be available to all shareholders and posted on the issuer's website.

Recommended