By Chris Jones - 9th January 2006
Europe’s growing cross-border shareholding culture will be recognised on Tuesday when the European Commission publishes new proposals on investor rights.
The draft regulations, proposed by Internal Market Commissioner Charlie McCreevy, will give greater rights to investors holding shares in companies outside their home market.
In particular, it will be easier for shareholders to vote by allowing postal, proxy or email voting ahead of shareholder meetings.
The rules have been drawn up after consultation with European business, and are expected to get the backing of both the European Parliament and national governments.
“Shareholders must be able to exercise their rights easily and receive appropriate information, no matter where in the EU they are based,” McCreevy said back in May, when he first unveiled the proposal.
“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.”
One key issue to be addressed by the new proposals is share blocking – a requirement to stop share trading ahead of shareholders’ meetings in order to prevent the last-minute transfer of voting rights.
The commission’s consultation showed that there was widespread opposition to such blocking requirements.
Instead, most professional bodies recommend that a ‘record date’ should be set, at around five days before the shareholders meeting, and the commission is expected to propose a system along these lines.
The proposals will also give non-resident shareholders – both institutional and individual - the right to ask questions and table resolutions.
Without the new rules, Brussels fears that that the increasing number of cross-border shareholdings would leave many European companies controlled by ‘passive’ investors.
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