ACTION REQUESTED
[18045]
September 28, 2004
TO: INTERNATIONAL COMMITTEE No. 47-04
RE: EU COMMISSION ISSUES CONSULTATION DOCUMENT ON IMPROVING
SHAREHOLDER RIGHTS
The European Commission has asked for comment in drafting a directive on
shareholders’ rights. A copy of the consultation document is attached.
As previously reported, the EU Commission Corporate Governance Action Plan makes
improving the rights of shareholders of EU companies a priority. The Commission believes that
a directive is needed because an effective exercise of shareholder rights, including voting rights,
requires the resolution of a number of legal issues. The key issues on which the Commission
seeks comment are as follows.
1. Scope of the Directive. The Commission is considering whether the proposal
should only apply to EU-listed companies but permit Member States to apply the standards to
non-listed companies.
2. Entitlement to Control Voting Rights. The Commission is considering whether
to design a system to determine the ultimate investor to decide how votes attached to shares are
cast. In this regard, the Commission focuses on: (1) cross-border voting, including the chain of
intermediaries for holding shares cross border; (2) stock lending; and (3) depositary receipts.
3. Dissemination of Meeting Information Prior to the Meeting. The Commission is
considering whether the directive should contain provisions regarding the disclosure of
meeting notices and materials and standards for the dissemination of the information.
4. Admission to and Participation in General Meetings. The Commission is
considering whether the directive should prevent shareblocking requirements and whether an
alternative system such as a record date system should be set at the EU level.
5. Shareholders’ Rights at Meetings. The Commission is considering whether to
propose minimum standards at the EU level for the exercise of the right to ask questions,
submit proposals, or vote in absentia. The Commission also is considering whether to define
criteria at the EU level to enable shareholders to participate in general meetings by electronic
means.
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6. Dissemination of Information after Meetings. The Commission is considering
whether the directive should require companies to disseminate the results of the vote or to
confirm, at shareholders’ request, the execution of voting instructions.
7. Additional Issues: The Commission asks whether there are additional issues that
should be addressed in a directive to enhance shareholders’ rights.
The Institute plans to submit comments to the Commission. Comments are due on
December 16, 2004. If there are any particular issues on which you think the Institute should
comment, please contact me at (202) 326-5810 or at jchoi@ici.org by November 12, 2004.
Jennifer S. Choi
Associate Counsel
Attachment (in .pdf format)