Shareholders’ Voting Rights I

A Company law directive establishes minimum requirements to facilitate the exercise of shareholder rights at a general meeting of listed companies, particularly on a cross-border EU basis. It takes account of the possibilities offered by modern technology. The Directive applies to all companies with registered offices within the EU and shares admitted for trading in a regulated market.

States may exempt UCITS undertakings the sole purpose is the collective investment of the capital provided by the public and cooperative societies.

In relation to information to be given prior to the general meeting, companies must

  • issue the convocation no later in 21 days before the date of the general meeting
  • Include essential information in the convocation including date and location of the meeting, proposed agenda, description of voting and participation procedures etc.
  • publish on the company’s internet site the convocation full text of draft resolutions and essential practical information (total number of shares, voting rights, documents to be submitted, comment against each agenda item, voting forms, if applicable.

Shareholders either individually or collectively must be able to put items on the agenda which will result in a revised agenda and submit draft resolutions. The right may be limited to shareholders having a minimum holding of 5 percent of the company’s capital. The state must set a single deadline by which these rights must be exercised if they are to be exercised.

Shareholders may ask questions and put items on the agenda and the company is obliged to answer them. Rights are subject to necessary measures being taken to identify the shareholder and ensure the good order of the meeting. Shareholders’ participation may not be subject to any limitation down to the record date. Persons or shareholders on the record date are entitled to vote at the meeting.

States may stipulate a single record date applying to all listed companies They may exempt companies who issue registered shares who are able to identify all their shareholders on the date of the meeting. The record date must not be earlier than 30 days prior to the general meeting and must be at least 8 days before the convocation of the meeting.

States must abolish restrictions on shareholder participation by electronic means at a general meeting. Shareholders may vote by proxy. A proxy may be issued to a natural or legal person to participate in the meeting and exercise the shareholder’s rights on their own name.

Shareholders’ Voting Rights II

States must abolish restrictions regarding the eligibility of persons to be appointed proxies, except for requirements relating to legal capacity. States may impose restrictions or obligations in the event of potential conflicts of interest between the shareholder and the proxy holder. The number of proxy holders and period of appointment may be restricted.

States must authorize shareholders to appoint proxies by electronic means. States may not submit the validity or proxy to any requirement other than the fact that it should be in writing.

Where national law requires prior disclosure of certain information when exercising the right to vote, that information may not in the case of a shareholder acting in a professional capacity for a client, exceed what is strictly necessary to identify the client the number of various rights, shares with voting rights.

States must authorize companies to offer their shareholders the option of voting by correspondence prior to the meeting. Companies must account for the exact number of votes for each resolution. If no shareholder requests a count, states may allow companies only to count the number of votes required to obtain the majority in order to pass the resolution. States must publish the results of voting at general meetings on their internet site no later than 15 days after the meeting is held.

Public Companies

The second company law Directive coordinates national provisions in relation to the formation of public limited companies, minimum capital requirements distribution to shareholders and increases and reductions in capital. The purpose is to protect shareholders and creditors by the coordination of national provisions.

The Directive lays down minimum requirements in terms of information. The statutes or instrument of incorporation of a public limited company must contain the following information:

  • Type and name of the company;
  • Objects of the company;
  • Amount of capital;
  • Rules governing appointing members responsible for the management, administration, and supervision of the company.

Further information must be published in the statutes, instruments of incorporation or separate document including

  • registered office,
  • value, number, and form of subscribed shares,
  • amount of subscribed capital,
  • the identity of the signatories of the instrument of incorporation or the statutes.

The Directive provides rules in respect of:

  • Value of the minimum capital;
  • The issuing and acquisition of shares;
  • Distribution of dividends;
  • Financial aid accorded by companies for the acquisition of those shares;
  • Increases and reductions in capital;
  • Dissolution of PLC.

Single Member Companies

This twelfth company Directive provides for single-member private limited companies. A company may have a single-member by virtue of being formed as such or by becoming a single-member company. Where a company becomes a single-member company because all of its shares have come to be held the single person, that fact, together with the identity of the single-member must be entered on a register kept by the company and accessible to the public or be recorded or entered in the register within the meaning of the directive.

The single-member exercises the powers of the general meeting of the company. Decisions taken by the single-member on contracts entered between him and the company must be recorded in minutes and drawn up in writing.

Branch Disclosures

The eleventh company law Directive deals with branch disclosures. It applies to branches of public or private company situate in the State other than that in which the company has established.

The branches of companies from another State must publish documents including the following:

  • address of the branch,
  • activities of the branch,
  • company’s place of registration and number,
  • particulars of directors.

The branch no longer needs to publish branch accounts but must publish annual accounts and reports of the company as audited and published in accordance with the law of the state by which the company is governed.

EU branches of public and private companies established in another state but having legal form conforming to that in the EU must publish documents which include information about

  • the branches in the EU State
  • the law of the place by which the company governed;
  • the company memorandum and articles of association;
  • the legal form of the company;

The branch must publish the annual accounts and report of the company. The accounting documents must have been drawn up under the EU  legislation or in such a way that is equivalent to it. They must also have been audited in conformity with the law that governs the company. In the event of the nonconformity or non-equivalence, states may require the accounting documents relating to the branch’s activities be drawn up and published.

States must provide appropriate penalties for failure to disclose information required.

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