- Technology facilitates meetings to be held entirely telematically, enabling all shareholders to participate on an equal footing.
- This model is widely implemented in other countries such as Germany or the United States.
- The conference ‘Shareholders’ Meetings in the 21st Century’, organised by BME, analysed these new trends and the changes needed to encourage shareholder participation.
- Major Spanish companies, such as Banco Santander, Telefónica and Iberdrola, together with proxy solicitors, shareholder associations, magistrates, law firms and business law professors, shared their opinions on the modernisation of legislation on general meetings.
Spain's major listed companies agree on the need to reform current Spanish regulations so that each company can freely choose how to hold its General Meeting. The experts stress that in Spain the regulation of general meetings lacks the necessary flexibility to hold fully telematic meetings, which are already common in other European countries and in the United States, as well as being the preferred method for many shareholders and institutional investors, who in most cases reside in other countries.
This is one of the main conclusions of the conference ‘Shareholders’ Meetings in the 21st Century: Permanent and telematic meeting model‘, organised by BME at the Palacio de la Bolsa de Madrid, which was attended by representatives of listed companies such as Santander, Telefónica and Iberdrola, the Better Finance investors’ federation, the Georgeson consultancy firm and experts from law firms such as A&O Shearman, Cuatrecasas and Garrigues, as well as magistrates, professors and members of the General Codification Commission.
Among other topics, the different round tables discussed technology, which already allows the holding of general shareholders' meetings completely telematically, a common practice in other countries and preferred by national and international institutional investors. However, current Spanish regulations require the possibility of two-way interventions in real time, which is unfeasible for companies with hundreds of thousands of shareholders.
Large listed companies have permanently open channels for the active participation of shareholders throughout the year and not limited to the day and time of the general meeting as required by current legislation. Thanks to these means in these companies, the majority of shareholders exercise their rights to information and proposals throughout the year and their right to participate in the meeting is exercised remotely before the meeting, transforming the general meeting into a continuous and auditable process of information and participation.
Javier Hernani, CEO of BME, welcomed the attendees and highlighted the importance of modernising the General Meetings. ’Better communication and interaction between issuers and investors would result in greater confidence in the market and, consequently, lower capital costs. It is therefore key for companies to facilitate maximum shareholder information and involvement in the company. In this regard, technology has opened up new channels of communication that must be explored in all their power and virtuality,’ said the CEO of BME.
The need to modernise regulations
During the conference, the necessary measures to advance in the active involvement of shareholders, current and future trends in the organisation of general meetings and proposals for reforming the current regulations in Spain were discussed. Shareholders' preferences on the format of the meetings (face-to-face, hybrid or telematic) and the legal limitations that hinder the holding of fully telematic meetings were assessed.
During the first panel discussion, about current and future trends in the organisation of general meetings, the speakers focused on policies and channels for the ongoing engagement of shareholders, highlighting their valuable contribution to the organisation of a successful board meeting. They also noted the importance of diversifying the means of information and participation available to shareholders, as well as the preference of institutional investors for remote participation, mainly before the meeting.
The second round table addressed the current comparative legal framework and proposals for reform of the Capital Companies Act. The group of experts stressed that the exclusively telematic meeting format used with very satisfactory results during the pandemic has fallen into disuse, despite its advantages for maximising participation in large companies with an international projection in their shareholding.
The conditions imposed by the Capital Companies Act make it difficult for these companies to convene their meetings exclusively by telematic means, without this mandatory regulation protecting the interests of shareholders and equal treatment among them more effectively.
The final roundtable focused on shareholders as the true protagonists of listed companies and featured the main board secretaries of top-tier listed companies.
The representatives of large corporations highlighted their companies' efforts to respond to and even anticipate the expectations of shareholders and investors, as evidenced by the engagement measures presented during the conference, which form part of their respective corporate policies. In this context, they stressed the importance of striking a balance between mandatory legal rules and the self-regulation of listed companies, which should be able to choose the most appropriate general meeting model at any given time, depending on the circumstances and the interests present in their shareholder base.
The proposals for improving Spanish regulations and bringing them into line with the main European countries discussed at the conference are in line with the White Paper on the competitiveness of Spanish financial markets, published by BME, which includes 56 specific proposals. It is a work that benefited from the contributions of some thirty entities and a large number of participants and players in the Spanish capital markets.
You can see photos of the conference at this link.
