Shareholder Rights Directive - New General Meeting Requirements On Traded Companies

Author:Mr Peter Bateman
Profession:CMS Cameron McKenna LLP
 
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On 3 August 2009 the Shareholder Rights Directive will be

implemented in the UK via changes to the Companies Act 2006. Traded

companies (i.e. those with voting shares admitted to trading on an

EEA regulated market, such as the UK Official List) will have to

include more information in general meeting notices and on their

websites about shareholders' rights to vote, put resolutions

and ask questions. In order to continue to hold EGMs on a minimum

of 14 days' notice, traded companies will need to pass a

special resolution and offer all shareholders the ability to

appoint proxies electronically. Separately, the opportunity is

being taken to clear up current uncertainties over the rights of

multiple corporate representatives and proxies to vote at general

meetings.

The new rules apply to general meetings of which notice is given

(or, where a meeting is reconvened, was first given) on or after 3

August.

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Full Article

On 3 August 2009 the Shareholder Rights Directive will be

implemented in the UK via changes to the Companies Act 2006. Traded

companies (i.e. those with voting shares admitted to trading on an

EEA regulated market, such as the UK Official List) will have to

include more information in general meeting notices and on their

websites about shareholders' rights to vote, put resolutions

and ask questions. In order to continue to hold EGMs on a minimum

of 14 days' notice, traded companies will need to pass a

special resolution and offer all shareholders the ability to

appoint proxies electronically. Separately, the opportunity is

being taken to clear up current uncertainties over the rights of

multiple corporate representatives and proxies to vote at general

meetings.

The new rules apply to general meetings of which notice is given

(or, where a meeting is reconvened, was first given) on or after 3

August.

Summary

To implement the Directive, the Companies (Shareholders'

Rights) Regulations 2009 will amend Part 13 of the Act (Resolutions

and meetings) so that:

Traded companies that wish to be able to hold EGMs on 14 clear

days' notice will need to pass a special resolution every year

and ensure that they offer all shareholders the ability to appoint

a proxy electronically (usually via their registrars' website)

as well as by executing a hard copy proxy form. This is because the

Directive mandates a minimum of 21 days' notice for all general

meetings, but allows companies to reduce this to 14 days for EGMs

if these conditions are satisfied. Many traded companies that have

held a general meeting since the Regulations appeared in draft form

have already put such a resolution to shareholders. Others should

now do so.

Shareholders in traded companies will have to be provided with

more information in the notice of a general meeting and/or on the

company's website about how to vote, put resolutions and ask

questions.

Traded companies will need to put more information on their

websites both before and after a general meeting, including the

total number of shares in each class eligible to vote and the

percentage of shares that were actually voted. The meeting notice

and "matters set out in [it]", and any statements or

resolutions validly put forward by shareholders, will have to

remain on the website for two years.

Any shareholder in a traded company (however few shares he

holds) will have a right to put questions at a general meeting and

to have them answered by the company at the meeting. But no answer

need be given at the meeting if doing so would "interfere

unduly with the preparation for the meeting", involve the

disclosure of confidential information, be "undesirable in the

interests of the company or the good order of the meeting", or

where an answer has already been given on the company's website

in a Q&A format. Whilst such a right is not new, some

shareholders may be prompted to put questions. From the point of

view of companies, the procedure for dealing with questions at a

general meeting is unlikely to need to change much, but they may

find it useful to develop more wide-ranging Q&A sections on

their websites. It is also sensible to encourage shareholders to

submit any questions ahead of the meeting, in order to give the

company time to look into the matter and prepare a considered

response.

Members with 5% of the voting rights in a public or private

company will be able to requisition an EGM. Currently the threshold

is 10% (although it can be reduced to 5% for private companies in

some circumstances).

It will no longer be possible for the chairman of a traded

company to have a casting vote at a general meeting.

The Regulations will also clear up anomalies in Part 13 relating

to the rights of proxies and corporate representatives to vote at

general meetings. These changes apply to all companies, but in

practice they will impact mostly on listed and AIM companies.

Amendments to sections 282 to 285 and 323 will make clear that:

Where a corporate nominee holding for two or more beneficial

owners appoints multiple corporate representatives to vote

different ways in respect of different underlying blocks of shares,

all the votes cast by the corporate representative on a show of

hands or a poll will be counted. At present, the relevant sections

in Part 13 have been interpreted to mean that the...

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