Corporate Governance: European Commission Consults On Minimum Standards That Should Apply To Shareholders’ Rights

The European Commission has launched a public consultation on minimum standards that should apply to shareholders’ rights in listed companies - particularly voting rights - in order to remove certain practical and legal obstacles that currently hinder the exercise of these rights in a cross-border context. Responses will be taken into account in a forthcoming proposal for a possible future directive, forming part of the Commission Action Plan on Corporate Governance. The deadline for responses is 15 July 2005.

Internal Market and Services Commissioner Charlie McCreevy said: “Shareholders must be able to exercise their rights easily and receive appropriate information, no matter where in the EU they are based. If there are undue obstacles preventing this in the Single Market, then we need to remove them, by setting minimum standards and making full use of new technologies to reduce distances and improve communication. This will help to ensure that companies are well run across the EU. I encourage all interested parties to respond to the consultation and give us their views on what these minimum standards should be.”

Respondents to an earlier consultation (IP/04/117) in this area, launched September 2004, supported the introduction of minimum standards at EU level for the organisation of General Meetings and the exercise of shareholders’ rights. The results of this consultation are available at:

http://europa.eu.int/comm/internal_market/company/shareholders/index_en.htm

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

the transparency of stock lending agreements and the status of depositary receipt holders
the dissemination of relevant information before General Meetings, notably to ensure that all shareholders, irrespective of their residence, obtain information in time and are able to cast an informed vote
the removal of share blocking as a prerequisite to vote and its replacement by a record date
the rights to ask questions and table resolutions, taking into account the fact that many shareholders are non-residents
various methods of voting at a distance (by post, electronically, or by proxy)
the availability to all shareholders of voting results following General Meetings.

Responses

The consultation paper is available at:

http://europa.eu.int/comm/internal_market/company/shareholders/index_en.htm

Responses should be sent by 15 July 2005 to DG Internal Market - Unit F2, European Commission, B-1049 Brussels, or to: Markt-COMPLAW@cec.eu.int.

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. This exercise on minimum standards for shareholders’ rights is the sixth consultation arising from the Action Plan.