Harmonisation of
Shareholder Rights – A
comparative analysis
Matthias Pannier
Research Fellow in European Law
Harmonisation of Shareholder Rights on EU level: Implications for
the UK
BIICL 6 July 2005
Overview
1)EU Level: Existing shareholder rights on European
level
2)MS level: current status and reform proposals
• Pre general meeting communications
• Admission to the general meeting
• Right to ask questions, Voting, Proxy voting
3) Summary
EU Level: Existing Shareholder
Rights on European Level
1) SE Statute
• Art 54(1) SE Statute frequency of the AGM
• Art 55, 56 SE Statute 10% minority to call in GM and to add
additional items to the agenda
2) Company reconstruction
• Shareholder approval and information
• Principle of equality and minority protection
3) Transparency Directive
• Art 17 standards for shareholder information and proxy
voting
GM Notice Periods: Commission
Proposal
Annual General Meetings of listed companies shall
be convened on a first call with no less than 21
business days notice.
Other Shareholders’ Meetings shall be convened
on a first call with no less that 10 business days
notice.
GM Notice: Content and Form
Commission proposal
Description of participation and voting
procedures and requirements
Full text of the resolutions and documents available
at the latest 15 business days before AGM, and at
latest 10 business days before other GM
Language customary in the sphere of international
finance
Information on website
GM Notice Periods in some MS
EU Dir
Austria
Finland
France
Germany
Italy
The Netherlands
Poland
Spain
Sweden
UK
21 days AGM (10 days others)
14 days
Between 1 week and 2 months
30 days (prelimiary) 15 days call
30 days
15 days (30 days for plc)
15 days
3 weeks
15 days
6 weeks (2-6 weeks EGM)
21 days AGM (otherwise 14 days) 20 working
days Combined Code
GM Notice Germany “permanent
corporate law reform”
KonTraG 1998 (Control and Transparency Act)
NaStraG 2002 (Act on Registered Shares and
Facilitating the Exercise of Voting Rights)
UMAG 16 June 2005 (Act to improve corporate
integrity and modernise the regime governing
shareholder claims)
German Corporate Governance Code (Cromme
Code) amended 2005
GM Notice Germany: latest
changes
1)UMAG changed period to 30 days (§ 123 Abs. 1
und 4 Akt)
2)Notice and agenda to be announced in the
electronic federal bulletin (§§ 121 III S. 1, 124 I S. 1
AktG). In addition companies can use their
websites
3)Registered shares: email may be used (§§ 121 IV
S. 1, 124 I S. 3 AktG)
4)UMAG special shareholder forum in the electronic
federal bulletin
GM Notice France: latest changes
1)New Economic Regulation (Nouvelles Régulations
Economiques, NRE) 2001
2)Financial Securities Act 2003
• Minority shareholders with 5% of the share capital
can now demand a GM (Art L 225-103 CC, Art 122
D)
• Notice period 15 days (Art 126 D), listed SA 30
days (Art 130(3) D)
• Electronic communication allowed, shareholder
consent required
GM Notice UK: Latest changes
1) Companies Act 1985 (Electronic Communications) Order
2000 enabled cos to contact shareholders by electronic
means Sec 369(4) A-G CA
2) DTI white paper: notice periods for the AGM and EGM
equalised to 14 days, companies may set longer periods in
order to comply with the combined code.
3) DTI white paper: AGM linked to reporting cycle, held within
six months of the end of the financial year
4) DTI white paper: companies allowed to default to electronic
communications or communication, subject to shareholder
approval.
Shareholder right to add proposals
to the agenda
EU Dir
Belgium
Denmark
France
Germany
Greece
Netherlands
Spain
UK
5% of share capital or value of €10m
At least 20 % of the capital
If requisitioned in writing
0.5-5% of the capital
5% of capital or EUR 500.000
Unanimous consent
shareholders requisitioned the GM / unanimous
consent
If approved by members at GM
At least 5 % of capital or no less than 100
members holding shares on which an average
sum of £100 has been paid up
Admission to GM: Commission
proposal
1. Provisions making the right to vote in a General
Meeting conditional, or allowing the right to vote to
be made conditional, on the immobilisation of the
corresponding shares for any period prior to the
Meeting shall be abolished.
2. The right to vote at the General Meeting of a
listed company shall be made conditional upon
qualifying as a shareholder of that listed company
on a given date prior to the relevant General
Meeting.
Admission to GM: Latest changes
1) Germany: UMAG removed the reconciliation requirement
UMAG will impose a mandatory record date 14 days before
the meeting
2) France: articles could provide for a minimum number of
shares (Art. L 225-112 I), abolished by NRE of 2001, record
date between 5 and 15 days before the meeting
3) No share blocking under English law. Proposals for change
in the Myners report (two business days)
4) Polish law still provides for share blocking
Right to ask questions:
Commission proposal
Shareholders shall have the right to ask questions
at least in writing ahead of the General Meeting
and obtain responses to their questions.
Responses to shareholders questions in General
Meetings shall be made available to all
shareholders.
The above principles are without prejudice to the
measures which Member States may take, or allow
issuers to take, to ensure the good order of
General Meetings and the protection of
confidentiality and strategic interests of issuers.
Right to ask questions: latest
changes
1)Germany: UMAG restricts information right : any
information published on the corporate website is
considered to be given in the shareholder meeting,
failure to provide information does not always justify
a shareholder suit
2)France: Right to hand in written questions between
calling and opening of GM Art L 225-108(3) CC
Voting Right Commission Proposal
1. Member States shall ensure that shareholders of
listed companies have the possibility to vote by
correspondence.
2. Member States shall remove existing
requirements, and shall not impose new
requirements, on companies which hinder or
prohibit voting by electronic means at General
Meetings.
Voting right: Latest changes
1)Germany: voting right must be exercised in GM.
Electronic voting or voting by correspondence is not
possible but electronic proxy appointment
2)France: law enables shareholders to vote without
participating by correspondence (Art. L 225-107),
NRE enables companies to use electronic voting
3)UK: no electronic voting but electronic proxy
appointment
Voting possibilities
Belgium
Finland
France
Germany
Italy
Poland
Netherlands
Spain
UK
By mail
X
X
X
By electronic means
X
X (if articles provide)
(X) electr proxy app
X
X
X
X (and proxy app)
X
(X) electr proxy app
Source: Norbert Kluge and Michael Stollt `Board-level representation in the EU-25, ETUI 2004
Proxy Voting Commission Proposal
1. Every shareholder shall have the right to appoint
any other natural or legal person as a proxy to
attend any General Meeting on his behalf.
2. No constraint or limitations shall be imposed
other than provisions relating to the legal capacity
of the person. In particular, there shall be no
limitations on the persons who can be appointed as
proxies and on the number of proxies any such
person may hold.
3. Shareholders shall not be prevented from
appointing their representatives by electronic
means.
Proxy Voting Commission Proposal
4. Persons appointed as proxies shall enjoy the
same rights to speak and ask question in General
Meetings as those to which the shareholders they
represent are entitled.
5. Issuers shall not themselves collect proxies in
advance of General Meetings but shall entrust
independent third parties with such collection.
6. All votes cast on each resolution submitted to a
General Meeting shall be taken into account,
irrespective of the means by which the votes are
cast.
Proxy Voting: Latest changes
1)Germany: shareholders can be represented by any
person, NaStraG introduced an electronic proxy
appointment, a proxy can be unlimited in time,
special rules for the organized proxy of banks
2)France: only other shareholders and spouses can
be proxies, authorization can only be given for one
GM, „procuration en blanc“
3)UK: Proxy can be permanent and in an electronic
format, “general proxy“ “two-way-proxy