IP/04/1107

Brussels, 16th September 2004

Corporate governance: Commission consults on shareholders’ rights

The European Commission has 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. Responses will be taken into account in a forthcoming proposal for a Directive – part of the Commission Action Plan on Corporate Governance. The deadline for responses is 16 December 2004.

Internal Market Commissioner Frits Bolkestein said: “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. 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.”

The Commission’s consultation paper gives first indications as to the possible future EU regime on shareholders’ rights in listed companies. The Commission considers that this should be based on a Directive, since the effective exercise of such rights requires solving a number of legal difficulties.

The main issues on which the Commission is seeking responses are:

• the entitlement to control the voting right - investors in shares are often not recognised as shareholders, in particular 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
• the dissemination of information following the general meeting and the possible need for confirmation that votes have been executed.

Responses

The consultation paper is available at:

http://ec.europa.eu/internal_market//company/shareholders/index_en.htm

Responses should be sent by 16 December 2004 to DG Internal Market - Unit G4, European Commission, B-1049 Brussels, or to: Markt-COMPLAW@ec.europa.eu

Unless an explicit request for confidentiality is made, contributions will be treated as documents that the Commission can make public.

Background

The Commission’s May 2003 Action Plan to modernise company law and enhance corporate governance (see IP/03/716 and MEMO/03/112) contains a set of initiatives aimed at strengthening shareholders' rights, reinforcing protection for employees and creditors, increasing the efficiency and competitiveness of European business and boosting confidence on capital markets.

Public consultation on the Action Plan as a whole, which ended in mid-September 2003, showed a strong consensus behind the main measures. The exercise on shareholders’ rights is the fifth consultation arising from the Action Plan.