Proposal for a Directive of the European Parliament and of the Council on the exercise of voting rights by shareholders of companies having their registered office in a Member State and whose shares are admitted to trading on a regulated market and amending Directive 2004/109/EC
Date: 2006-01-05
Institutions: European Commission
Subjects: EU Member State, head office, official market, securities, shareholder, stock exchange, stock-exchange listing

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 05.01.2006 
COM(2005) 685 final 

2005/0265 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the exercise of voting rights by shareholders of companies having their registered 
office in a Member State and whose shares are admitted to trading on a regulated 
market and amending Directive 2004/109/EC 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

INTRODUCTION 

1.1. 

Context 

Shareholder  participation  is  an  essential  precondition  for  effective  corporate 
governance.  However,  EU-citizens  holding  shares  in  a  listed  company  situated  in 
another  Member  State  often  face  severe  problems  when  they  wish  to  exercise  the 
voting rights attaching to these shares and sometimes even encounter obstacles that 
make voting practically impossible. Nowadays, investors typically hold their shares 
through accounts opened with securities intermediaries, who, in turn, hold accounts 
with  other  securities  intermediaries  and  central  securities  depositories  in  other 
jurisdictions.  The  legal  constructs  from  which  shareholders’  rights  emanate  in  the 
Member  States  are  not  always  fully  adapted  to  this  modern  form  of  intermediated 
holdings.  The  cross-border  chains  of  intermediaries,  therefore,  make  not  only  the 
communication  process  between  issuers  and  shareholders,  but  also  the  voting 
process, more difficult. 

The scope of this problem has broadened significantly in recent years and continues 
to  grow  as  the  cross-border  nature  of  equity  investment  increases,  which  is  further 
stimulated by the drive towards creating integrated financial markets in Europe and 
beyond. The growing proportion of share ownership by foreign investors is already 
posing the threat of EU listed companies being owned by a passive shareholder base. 
Moreover,  existing  legal  obstacles  to  cross-border  voting  prevent  small  individual 
cross-border shareholders who are willing to exercise their voting rights from using 
means that would allow them to do so cheaply and simply. 

In  its  “Action  Plan  on  Modernising  Company  Law  and  Enhancing  Corporate 
Governance  in  the  European  Union”,  the  Commission  considered,  therefore,  that 
there is  a  need  to  facilitate the  cross-border exercise  of  shareholders’  rights.  It was 
recognised not only that access to general meetings and other rights related to general 
meetings should be open to shareholders independently of their country of residence 
in the EU, but also that a number of specific problems relating to cross-border voting 
would need to be solved. 

The existing rules at EU level are not sufficient to attain this objective. Article 17 of 
the  Transparency  Directive1  requires  issuers  to  make  available  certain  information 
and  documents  which  are  relevant  to  general  meetings.  However,  such  information 
and  documents  are  to  be  made  available  in  the  issuer’s  home  Member  State,  and 
Article  17  does  not  mention  when  and  how  these  are  to  be  made  available.  As  a 
result,  the  general  provision  in  Article  17  of  the  Transparency  Directive  does  not 
address  the  specific  difficulties  of  non-resident  shareholders  in  obtaining  access  to 
information  prior  to  the  general  meeting.  Furthermore,  the  Transparency  Directive 

1 

Directive  2004/109/EC  of  the  European  Parliament  and  of  the  Council  of  15 December 2004  on  the 
harmonisation of transparency requirements in relation to information about issuers whose securities are 
admitted to trading on a regulated market and amending Directive 2001/34/EC, OJ L390, 31.12.2004, 
p. 38 

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focuses on the information which issuers have to disclose to the market and thus does 
not deal with the shareholder voting process itself. 

From  September  to  December  2004  and  from  May  to  July  2005  the  Directorate-
General for Internal Market and Services carried out two public consultations on the 
enhancement of shareholders’ rights, especially in a cross-border context. The aim of 
these consultations was to elicit the views of interested parties on the main obstacles 
to  cross-border  voting  and  on  possible  minimum  standards  which  the  Commission 
could  propose  in  this  field.  Both  consultations  solicited  a  considerable  number  of 
replies  from  market  participants  across  all  interest  groups,  who  showed  significant 
support for the measures that had been put forward for discussion.  

1.2. 

Objectives of the current initiative 

From empirical evidence and the responses to the public consultations, it appears that 
the main obstacles to cross-border voting for investors are the following, in order of 
importance: the requirement to block shares before a general meeting (even where it 
does not affect the trading of the shares during this period), difficult and late access 
to  information  that  is  relevant  to  the  general  meeting  and  the  complexity  of  cross-
border  voting,  in  particular  proxy  voting.  Share  blocking  and  the  complexity  of 
proxy voting also have a considerable impact on the costs of cross-border voting. 

Abolishing  existing  constraints  which  hamper 
the  voting  process  requires 
amendments to the relevant national legislations. A directive seeking to remove the 
key  obstacles  to  the  cross-border  voting  process  and  focusing  on  selected  rights  of 
shareholders in the general meeting seems the most appropriate type of instrument, if 
effective simplification of the cross-border voting process is to be achieved and the 
disparities  between  Member  States  reduced.  Other  topics  covered  in  the  public 
consultations,  which  are  indirectly  related  to  the  exercise  of  voting  rights,  such  as 
stock lending, depositary receipts or the rules governing languages, could form part 
of a Commission recommendation. 

The current proposal for a Directive therefore pursues the following objectives: 

(1) 

(2) 

(3) 

Ensure that all general meetings are convened sufficiently in advance and that 
all documents to be submitted to the general meeting are available in time to 
allow  all  shareholders,  no  matter  where  they  reside,  to  take  a  reasoned 
decision and to cast their votes in time. 

Abolish  all  forms  of  share  blocking.  These  should  be  replaced  by  a  record 
date  system  to  determine  the  entitlement  of  a  shareholder  to  participate  and 
vote in a general meeting. 

Remove  all  legal  obstacles  to  electronic  participation  in  general  meetings. 
Where  the  issuer  decides  to  make  electronic  means  available  to  its 
shareholders,  these  make  it  much  easier  for  the  active  shareholders  to 
participate  actively  in  the  meeting.  However,  technology  is  not  advanced 
enough to permit active electronic participation in all cases with a sufficient 
guarantee  of  security,  and  such  facilities  are  costly  to  introduce.  Therefore, 
there should not be an obligation for issuers to offer such a possibility to their 
shareholders. 

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(4) 

Offer non-resident shareholders simple means of voting without attending the 
meeting (voting by proxy, in absentia and by giving instructions). 

2. 

COMMENTS ON SPECIFIC ARTICLES 

2.1. 

Chapter I:  General provisions 

2.1.1.  Article 1 – Subject matter and scope 

The scope is limited to issuers of shares, taking account of the objective of the Directive to 
facilitate  the  exercise  of  voting  rights  of  shareholders  in  general  meetings.  The  definition 
includes also European Companies (SEs) which, according to Article 10 of the Statute for a 
European Company2, are treated like public limited companies that have been founded under 
the law of the Member State where the SE has its seat. 

Paragraph 2 contains a Member State option for an exemption for undertakings for collective 
investment in transferable securities, taking account of the fact that specific requirements are 
laid  down  elsewhere3.  Where  this  option  is  used  the  proposed  wording  excludes  the 
possibility of treating UCITS as issuers for the purposes of this Directive but does not prevent 
them from benefiting from the provisions in their role as shareholders of other companies. 

2.1.2.  Article 2 – Definitions 

The definition of shareholders in point (c) only takes up the wording of points (i) and (ii) of 
Article 2(1) (e) of the Transparency Directive and thus excludes holders of depositary receipts 
from its scope. Although investors in depositary receipts should in principle also be entitled to 
determine  how  underlying  shares  are  to  be  voted,  the  inclusion  of  receipt  holders  in  the 
definition  would  not,  of  itself,  necessarily  lead  to  this  result  as  the  receipts,  in  practice,  are 
often  held  by  custodians  and  not  by  the  investors  themselves.  Furthermore,  the  contents  of 
issuing agreements on depositary receipts vary as far as voting rights are concerned and these 
differences usually also have an impact on the price of the receipts. Therefore, it seems more 
appropriate to deal with this issue in the context of a separate recommendation which will be 
able to take account of the specificities of this instrument. 

Point (e) contains a definition of the term “proxy” which currently does not have an identical 
meaning in all Member States. In some Member States, a proxy is limited to the exercise of 
the voting right and so, for more comprehensive empowerments, a power of attorney is used. 
In others the proxy may potentially cover all rights of the shareholder in the general meeting. 
The proposal opts in favour of the latter alternative. The person empowered by proxy (who, in 
practice, is often also called “the proxy”) is referred to in the text of the Directive as “proxy 
holder” (see proposed Article 10). 

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Council  Regulation  (EC)  No  2157/2001  of  8  October  2001  on  the  Statute  for  a  European  Company 
(SE), OJ L 294, 10.11.2001, p. 1 
in particular Council Directive 85/611/EEC of 20.12.1985 on the co-ordination of laws, regulations and 
administrative provisions relating to the undertaking for collective investment in transferable securities 
(UCITS), as last amended by Directives 2001/107/EC and 2001/108/EEC of the European Parliament 
and of the Council of 21 January 2002 (OJ L 41, 13.2.2002, p. 20 and 34 respectively). 

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2.1.3.  Article 3 – More stringent national requirements 

The Directive is a minimum harmonisation directive. It introduces minimum standards which 
ensure that shareholders have a timely access to complete information in relation to general 
meetings and have simplified ways of voting without attending the general meeting. Member 
States  are  left  free  to  maintain  or  introduce  provisions  which  are  more  favourable  to 
shareholders. 

2.1.4.  Article 4 – Equal treatment of shareholders 

The  article  takes  up  the  general  principle  contained  in  Article  17(1)  of  the  Transparency 
Directive and applies it to the rights of shareholders covered by this proposal for a Directive. 

2.2. 

Chapter II:  General meetings of shareholders 

2.2.1.  Article 5 – General meeting notice  

Article 5 imposes on the issuer the obligation to send out to the addressee the meeting notice 
announcing that the meeting will take place and containing the basic information relating to 
the  meeting.  Under  the  mechanisms  currently  in  use,  in  the  case  of  bearer  shares,  the 
addressee  would  normally  be  the  CSD,  and  in  the  case  of  registered  shares,  the  registered 
shareholder. The addressees and the investor situated further down the chain will then be able 
to obtain the additional information set out in paragraph 3 from the sources indicated in the 
meeting notice. 

2.2.2.  Article 6 – Right to add items to the agenda of general meetings and to table draft 

resolutions 

The  right  to  add  items  to  the  agenda  and  to  table  draft  resolutions  enables  shareholders  to 
decisively influence general meetings. This right is usually reserved to shareholders holding a 
minimum  proportion  or  number  of  shares.  Some  of  the  existing  thresholds  are  unduly  high. 
This  article  therefore  confirms  the  right  to  add  items  to  the  agenda  and  to  table  draft 
resolutions as a matter of principle (paragraph 1), and introduces maximum thresholds at EU 
level.  These  thresholds  have  been  determined  with  a  view  to  lowering  those  currently 
applying in some Member States. However, where the thresholds in other national laws, are 
already lower than those proposed here, Article 6 - being a minimum harmonisation provision 
-  is  obviously  not  to  be  understood  as  encouraging  these  Member  States  to  raise  their 
thresholds. Furthermore, the article provides that the amended agenda and the new resolutions 
should be circulated to shareholders. This requires that items be added to the agenda and draft 
resolutions be tabled sufficiently in advance of the general meeting. The determination of the 
relevant deadline, however, is left to Member States. 

2.2.3.  Article 7 – Access to the general meeting 

Paragraph 1 provides for the prohibition of all forms of share blocking. Share blocking deters 
investors  from  voting  because  it  prevents  them  from  selling  their  shares  for  several  days 
before any general meeting. The financial risk associated with such a blocking period is very 
high, due to possible market fluctuations during the blocking period. Evidence also shows that 
share blocking arrangements which allow the disposal of shares during  the blocking period, 
subject to a subsequent reconciliation of shares and votes, are not a satisfactory solution. One 
of the reasons is that the system is not understood by investors, who are often unaware of the 

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possibility  of  disposing  of  their  shares  during  the  blocking  period.  Furthermore,  the 
reconciliation  procedure,  which  is  cumbersome,  carries  the  risk  of  mistakes,  as  a  result  of 
which votes may be disregarded. 

Paragraph 2 allows Member States to introduce a record date system as a requirement upon 
which  access  to  the  general  meeting  may  be  made  conditional.  The  different  processes  for 
preparing general meetings and the ensuing needs in terms of timing differ considerably from 
one Member State to another; therefore, it does not seem appropriate to introduce a uniform 
record  date  at  EU  level.  Paragraph  3  of  the  proposal  therefore  leaves  it  to  national  law  to 
determine any such date, within a maximum period of 30 calendar days preceding the general 
meeting, and also to lay down the details of the procedure. However, in order to avoid certain 
shareholders being prevented in practice from participating and voting, it is made clear that no 
excessive formal requirements for the proof of ownership may be imposed in national law or 
in the articles of association. 

2.2.4.  Article 8 – Participation in the general meeting by electronic means 

The article provides that all obstacles to electronic participation are to be removed. However, 
requirements  relating  to  the  identification  of  shareholders  and  the  security  of  the  electronic 
communication cannot be considered as barriers to electronic participation, as long as they are 
proportional to their objective. 

2.2.5.  Article 9 – Right to ask questions 

Shareholders should be able to question management at general meetings, which are the main 
forum in which shareholders can exercise their rights and speak out. Furthermore, the right to 
ask questions would be devoid of any actual content if there were no corresponding obligation 
on the part of the issuer to reply to questions, subject to measures needed to ensure the good 
order of the meeting, confidentiality or the protection of business interests. A response is not 
necessary if the shareholder can obtain the relevant information easily because the issuer has 
made it available in the form of “frequently asked questions”, e.g. on its website. In a cross-
border context, it should be possible to ask questions remotely, e.g. at least by post, and there 
should be no obstacle to the use of electronic means. All replies to questions should be made 
easily available to all shareholders, irrespective of their residence, and this can be achieved in 
particular by publishing them on the issuer’s website. 

2.2.6.  Article 10 – Proxy voting 

The purpose of Paragraph 1 is to remove all existing limitations on the persons who may be 
granted a proxy, other than the requirement that the person holding a proxy should have legal 
capacity. Member States which do not impose any such constraints have not experienced any 
adverse  consequences  at  general  meetings  as  a  result.  However,  some  limitations  may  be 
justified where the proxy holder is in a situation giving rise to a conflict of interest. In such 
cases, Member States may decide that the appointment of such proxy holders is to be made 
subject to the issuing of formal voting instructions. 

For  the  good  order  of  general  meetings,  paragraph  1  provides  for  that  one  shareholder  may 
only grant one proxy in respect of his entire voting entitlement. However, one person acting 
as  a  proxy  holder  should  be  able  to  hold  proxies  from  more  than  one  shareholder. 
Consequently, proxy holders acting on behalf of several shareholders should be able to cast 

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split  votes  in  respect  of  any  resolution,  in  accordance  with  the,  possibly  conflicting,  voting 
instructions given to them by the shareholders.  

Paragraph 3 makes it clear that proxy holders should in principle have the same rights as those 
which the shareholder would enjoy in relation to the general meeting. This should be limited, 
however, to proxy holders acting on behalf of one shareholder or of several shareholders with 
identical  voting  instructions.  A  proxy  holder  representing  several  shareholders  with 
conflicting voting instructions should confine its role to voting. 

2.2.7.  Article 11 – Appointment of proxy holder 

Article 11 prohibits unduly cumbersome  formal requirements, proxy grants and the issue of 
proxy  instructions.  However,  issuers  need  to  be  sufficiently  certain  as  to  the  identity  of  the 
shareholder  and  the  proxy  holder.  Member  States,  therefore,  are  given  the  possibility  of 
imposing  requirements  or  allowing  issuers  to  impose  requirements  with  regard  to  the 
identities of the shareholder and the proxy holder, subject to proportionality. 

2.2.8.  Article 12 - Voting in absentia 

Where  shareholders  hold  registered  shares  and  are  known  to  the  company,  the  easiest  and 
cheapest way to cast votes remains the postal vote. Such shareholders, therefore, should have 
this  possibility.  Issuers  should  remain  free  to  offer  in  addition  electronic  voting  facilities, 
whether by Internet or otherwise. 

2.2.9.  Article 13 – Voting according to instructions 

Paragraph 1 establishes the right of those persons or entities that hold shares in the course of 
business  on  behalf  of  investors  to  hold  such  shares  in  individual  or  omnibus  accounts. 
Individual  accounts  are  more  transparent  and  make  the  tracking  of  votes  possible,  but  are 
more expensive to maintain than omnibus accounts, in which the shares of several clients are 
pooled. The choice between individual and omnibus accounts should exist because individual 
and  collective  accounts,  for  these  reasons,  do  not  appeal  to  the  same  kind  of  investors.  In 
particular, collective accounts may be more attractive for individual investors for cost reasons. 

Paragraph 2 explains that, in the case of omnibus accounts, the casting  of votes may not be 
made  subject  to  so-called  re-registration  requirements,  i.e.  the  requirement  that  the 
intermediary temporarily segregate out each of its investors vis-à-vis the Central Depository 
ahead  of  the  General  Meeting  in  order  to  be  able  to  exercise  voting  rights  attaching  to  the 
relevant  shares.  This  procedure,  which  exists  in  some  Member  States,  is  costly  and  time-
consuming. 

Paragraph 3 ensures that the persons or entities referred to in paragraph 1 have the possibility 
of  exercising  the  voting  rights  attaching  to  the  relevant  shares  if  investors  have  given  them 
voting instructions. This is currently not the case in all legal systems. Financial intermediaries 
have to keep evidence of such instructions for a minimum period, in case of disputes arising 
in relation to votes. 

Paragraph 4 gives the right to such persons or entities, which hold shares of the same issuer in 
a collective account on behalf of several investors, to split the votes according to the voting 
instructions which investors have communicated to them.  

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Paragraph 5 provides that where the person or entity is registered as the shareholder for the 
account of different investors it should have the possibility of issuing proxies to each of these 
investors  or  to  persons  designated  by  them.  This  is  a  derogation  from  the  general  rule 
established in Article 10(1). 

2.2.10.  Article 14 – Counting of votes 

This article provides that all votes cast in respect of any resolution must be taken into account 
when votes are counted. This is important in order to ensure that the voting results make the 
wishes of the shareholders fully transparent. It is also necessary for those investors who need 
assurance that their votes have actually been taken into account by the company. 

2.2.11.  Article 15 –Information after the general meeting 

Results  of  votes  are  often  given  in  the  general  meeting.  However,  those  shareholders, 
especially non-resident shareholders, who did not attend the general meeting should also have 
access to these results. This can be achieved, at no specific cost for issuers, if voting results 
are published on the issuers’ websites. 

2.3. 

Chapter III: Final provisions 

2.3.1.  Article 17 – Amendments 

Article 17 provides for an adaptation of Article 17 of the Transparency Directive in order to 
avoid the duplication of provisions with the same subject. Therefore, those parts of the article 
that  are  also  being  dealt  with  in  the  current  proposal  (former  paragraph  2  (a)  and  (b))  have 
been deleted in the new Article 17. The article, however, should not be repealed in its entirety 
as it deals not  only with information  to be provided  in the  context of General Meetings but 
also,  more  broadly,  with  all  information  to  be  made  available  to  shareholders  and  persons 
referred to in Article 10 of the Transparency Directive. 

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2005/0265 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the exercise of voting rights by shareholders of companies having their registered 
office in a Member State and whose shares are admitted to trading on a regulated 
market and amending Directive 2004/109/EC 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 95 thereof, 

Having regard to the proposal from the Commission4, 

Having regard to the opinion of the European Economic and Social Committee5, 

Having regard to the opinion of the Committee of the Regions6, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty7, 

Whereas: 

(1) 

(2) 

(3) 

4 
5 
6 
7 
8 
9 

In  its  Communication  to  the  Council  and  the  European  Parliament  “Modernising 
Company Law and enhancing Corporate Governance – A Plan to Move Forward” of 
21 May 20038, the Commission indicated that new tailored initiatives should be taken 
with  a  view  to  enhancing  shareholders’  rights  in  listed  companies  and  that  problems 
relating to cross-border voting should be solved as a matter of urgency. 

In its Resolution of 21 April 20049, the European Parliament expressed its support for 
the  Commission’s  intention  to  strengthen  shareholders’  rights,  in  particular  through 
the  extension  of  the  rules  on  transparency,  proxy  voting  rights,  the  possibility  of 
participating in general meetings via electronic means and ensuring that cross-border 
voting rights are able to be exercised. 

Holders of shares carrying voting rights should be able to exercise these rights given 
that they are reflected in the price that has to be paid at the acquisition of the shares. 
Furthermore,  effective  shareholder  control  is  a  pre-requisite  to  sound  corporate 
governance  and  should,  therefore,  be  facilitated  and  encouraged.  It  is  therefore 

OJ C […] […], p. . 
OJ C […] […], p. . 
OJ C […] […], p. . 
OJ C […] […], p. . 
COM(2003) 284 final 
OJ C104, 30.4.2004, p. 67 

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necessary  to  adopt  measures  to  approximate  the  laws  of  the  Member  States  to  this  end. 
Obstacles which deter shareholders from voting, such as making the exercise of voting 
rights  subject  to  the  blocking  of  shares  by  the  shareholder,  should  be  removed. 
However, this directive does not affect existing Community legislation on units issued 
by  collective  investment  undertakings  or  on  units  acquired  of  disposed  of  in  such 
undertakings. 

the  European  Parliament  and  of 

The currently existing community legislation is not sufficient to achieve this objective. 
the  Council  of 
Directive  2004/109/EC  of 
15 December 2004  on  the  harmonisation  of  transparency  requirements  in  relation  to 
information  about  issuers  whose  securities  are  admitted  to  trading  on  a  regulated 
market  and  amending  Directive  2001/34/EC10  imposes  on  issuers  to  make  available 
certain information and documents relevant to general meetings but such information 
and documents are to be made available in the issuer’s home Member State. Moreover 
Directive 2001/34/EC focuses on the information which issuers have to disclose to the 
market and accordingly does not deal with the shareholder voting process itself. 

Significant  proportions  of  shares  in  listed  European  companies  are  held  by 
shareholders who do not reside in the Member State in which the companies of which 
they are shareholder have their registered office. Non-resident shareholders should be 
able to exercise their rights in relation to the general meeting as easily as shareholders 
who reside in the Member State in which the company has its registered office. This 
requires that existing obstacles which hinder the access of non-resident shareholders to 
the  information  relevant  to  the  general  meeting  and  the  exercise  of  voting  rights 
without  physically  attending  the  general  meeting  be  removed.  The  removal  of  these 
obstacles  should  also  benefit  resident  shareholders  who  do  not  or  cannot  attend  the 
shareholders meeting. 

Shareholders  should  be  able  to  cast  informed  votes  at,  or  in  advance  of,  the 
shareholders  meeting,  no  matter  where  they  reside.  All  shareholders  should  have 
sufficient  time  to  consider  the  documents  intended  to  be  submitted  to  the  general 
meeting and determine how they will vote their shares. To this end, sufficient notice of 
the general meeting should be given and shareholders should be provided timely with 
the complete information intended to be submitted to the general meeting for approval. 
Shareholders should, in principle, also have the possibility to add items to the meeting 
agenda, to table resolutions and to ask questions related to items on the agenda. The 
possibilities which modern technologies offer to make information instantly available 
and  accessible  should  be  exploited,  also  with  a  view  to  making  information  on  the 
results of the vote available after the general meeting. 

Shareholders  should  have  a  choice  of  simple  means  to  cast  their  votes  without 
attending  the  shareholders  meeting.  Voting  without  attending  the  general  meeting  in 
person  should  not  be  subject  to  constraints  other  than  those  necessary  for  the 
verification  of  identity  and  the  security  of  communications.  Existing  limitations  and 
administrative  constraints  which  make  distance  voting  or  proxy  voting  cumbersome 
and costly should be removed. 

(4) 

(5) 

(6) 

(7) 

10 

OJ L 390, 21.12.2004, p. 1. 

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(8) 

Since the objectives of the action to be taken, namely to allow shareholders effectively 
to make use of their rights throughout the Community, cannot be sufficiently achieved 
by the Member States on the basis of the existing Community legislation and can, by 
reason of the scale and effects of the measures, be better achieved at Community level, 
the Community may adopt measures, in accordance with the principle of subsidiarity 
as  set  out  in  Article  5  of  the  Treaty.  In  accordance  with  the  principle  of 
proportionality,  as  set  out  in  that  Article,  this  Directive  does  not  go  beyond  what  is 
necessary in order to achieve these objectives. 

(9) 

In  order 
Directive 2004/109EC should be amended, 

to  avoid  duplication  of  provisions  with 

the  same  subject-matter, 

HAVE ADOPTED THIS DIRECTIVE: 

CHAPTER I 
GENERAL PROVISIONS 

Article 1 
Subject-matter and scope 

1. 

This Directive establishes requirements in relation to the exercise of voting rights in 
general  meetings  of  issuers  that  have  their  registered  office  in  a  Member  State  and 
whose shares are admitted to trading on a regulated market. 

2. 

Member States may exempt from this Directive issuers which are 

(i) 

collective investment undertakings of the corporate type within the meaning of 
Article 1 (2) of Directive 85/611/EEC11 and 

(ii)  undertakings,  the  sole  object  of  which  is  the  collective  investment  of  capital 
provided  by  the  public,  which  operate  on  the  principle  of  risk  spreading  and 
which do not seek to take legal or management control over any of the issuers 
of  their  underlying  investments,  provided  that  these  collective  investment 
undertakings  are  authorised  and  subject  to  the  supervision  of  competent 
authorities  and  that  they  have  a  depositary  exercising  functions  equivalent  to 
those under Directive 85/611/EEC. 

Article 2 
Definitions 

For the purposes of this Directive the following definitions shall apply: 

(a) 

‘issuer’  means  a  legal  entity  governed  by  public  or  private  law,  including  a  state, 
whose shares are admitted to trading on a regulated market;  

11 

OJ L 375, 31.12.1985, p3. 

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(b) 

(c) 

(d) 

(e) 

(f) 

‘regulated market’ means a market as defined in Article 4(1), point 14, of Directive 
2004/39/EC of the European Parliament and of the Council12; 

‘shareholder’ means any natural person or legal entity governed by private or public 
law that holds: 

(i) 

shares of the issuer in its own name and on its own account; 

(ii) 

shares of the issuer in its own name, but on behalf of another natural person or 
legal entity;  

‘credit 
institution’  means  an  undertaking  as  defined 
Directive 2000/12/EC of the European Parliament and of the Council13; 

in  Article 1(1)(a)  of 

‘proxy’ means the empowerment of a natural person or legal entity by a shareholder 
to exercise some or all rights of that shareholder in the general meeting in his or her 
name and on his or her behalf; 

“omnibus  account”  means  a  securities  account  in  which  securities  may  be  held  on 
behalf of different natural persons or legal entities. 

Article 3 
More stringent national requirements 

Member States may make issuers which have their registered office on their territory subject 
to requirements more stringent than those laid down in this Directive. 

CHAPTER II: GENERAL MEETINGS OF SHAREHOLDERS 

Article 4 
Equal treatment of shareholders 

The issuer shall ensure equal treatment for all shareholders who are in the same position with 
regard to participation and voting in its general meetings. 

Article 5 
General meeting notice 

1. 

Without  prejudice  to  Article  9(4)  of  Directive  2004/25/EC  of  the  European 
Parliament  and  of  the  Council14,  any  notice  convening  a  general  meeting  on  a  first 
call shall be sent out by the issuer not less than 30 calendar days before the meeting. 

2. 

The notice referred to in paragraph 1 shall at least contain the following: 

12 
13 
14 

OJ L 145, 30.4.2004, p1. 
OJ L 126, 26.5.2000, p. 1. 
OJ L 142, 30.4.2004, p. 12 

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(a) 

a precise indication of the place, time and draft agenda of the meeting; 

(b) 

(c) 

(d) 

a clear and precise description of the procedures that shareholders must comply 
with  in  order  to  be  able  to  participate  and  to  cast  their  vote  in  the  general 
meeting, including the applicable record date; 

a  clear  and  precise  description  of  the  available  means  by  which  shareholders 
can participate in the general meeting and cast their vote. Alternatively, it may 
indicate where such information may be obtained; 

an indication where and how the full, unabridged text of the resolutions and the 
documents  intended  to  be  submitted  to  the  general  meeting  for  approval  may 
be obtained 

(e) 

an  indication  of  the  address  of  the  Internet  site  on  which  the  information 
referred to in paragraph 3 will be posted. 

3. 

Within the deadline provided for in paragraph 1, issuers shall post on their Internet 
sites at least the following information: 

(a) 

the meeting notice referred to in paragraph 1; 

(b) 

the total number of shares and voting rights; 

(c) 

the  texts  of  the  resolutions  and  the  documents  referred  to  in  point  (d)  of 
paragraph 2; 

(d) 

the forms to be used to vote by correspondence and by proxy. 

Alternatively to the forms provided for in point (d) it shall be indicated on the site 
where and how the forms can be obtained. 

Article 6 
Right to add items to the agenda of the general meeting 
and to table draft resolutions 

1. 

2. 

3. 

Shareholders, acting individually or collectively, shall have the right to add items on 
the agenda of general meetings and table draft resolutions at general meetings.  

Where  the  right  to  add  items  on  the  agenda  of  general  meetings  and  table  draft 
resolutions  at  general  meetings  is  subject  to  the  condition  that  the  relevant 
shareholder or shareholders hold a minimum stake in the share capital of the issuer, 
such  minimum  stake  shall  not  exceed  5%  of  the  share  capital  of  the  issuer  or  a 
nominal value of EUR 10 million, whichever is the lower. 

The rights referred to in paragraph 1 shall be exercised sufficiently in advance of the 
date of the general meeting, to enable other shareholders to receive or have access to 
the revised agenda or the proposed resolutions ahead of the general meeting. 

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Article 7 
Admission to the general meeting 

1. 

2. 

3. 

The right to participate and to vote in a general meeting shall not be subject to any 
condition requiring the shareholder to block the relevant shares by deposit  or other 
means with a credit institution or another entity ahead of the general meeting, even if 
the blocking has no effect on the possibility of trading the shares. 

The  right  to  participate  and  vote  in  a  general  meeting  of  any  issuer  may  be  made 
subject to the condition that a natural person or legal entity qualifies as shareholder 
of the relevant issuer on a certain date prior to the relevant general meeting. 

The  proof  of  the  qualification  as  shareholder  may  be  made  subject  only  to  such 
requirements as are necessary to ensure the identification of shareholders and to the 
extent that they are proportionate to ensure the identification. 

The date referred to in the first subparagraph of paragraph 2 shall be fixed by each 
Member State for the general meetings of issuers having their registered office in that 
Member State. 

However,  this  date  shall  not  be  earlier  than  30  calendar  days  before  the  general 
meeting. 

Each  Member  State  shall  communicate  the date  so  fixed  to  the  Commission  which 
shall publish these dates in the Official Journal of the European Union. 

Article 8 
Participation in the general meeting by electronic means 

Member States shall not prohibit the participation of shareholders in the general meeting by 
electronic means. 

Requirements  and  constraints  that  act  or  would  act  as  a  barrier  to  the  participation  of 
shareholders in the general meeting by electronic means shall be prohibited, except in so far 
as  they  are  necessary  to  ensure  the  identification  of  shareholders  and  the  security  of  the 
electronic communication and are proportionate to ensure the identification. 

Article 9 
Right to ask questions 

1. 

2. 

Shareholders shall have the right to ask questions orally at the general meeting and/or 
in written or electronic form ahead of the general meeting. 

Issuers  shall  respond  to  the  questions  put  to  them  by  shareholders,  subject  to  the 
measures which Member States may take, or allow issuers to take, to ensure the good 
order of general meetings and their preparation and the protection of confidentiality 
and  business  interests  of  issuers.  A  response  shall  be  deemed  to  be  given  if  the 
relevant  information  is  available  on  the  Internet  site  of  the  issuer  in  the  form  of 
“frequently asked questions”. 

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3. 

1. 

2. 

3. 

1. 

2. 

3. 

Responses  to  shareholder  questions  referred  to  in  paragraph  1  shall  be  made 
available to all shareholders through the Internet site of the issuer. 

Article 10 
Proxy voting 

Every  shareholder  shall  have  the  right  to  appoint  any  other  natural  person  or  legal 
entity as a proxy holder to attend and vote at a general meeting on his behalf. There 
shall  be  no  restrictions  as  to  the  person  who  can  be  granted  a  proxy  other  than  the 
requirement that the person possesses legal capacity. 

However,  Member  States  may  restrict  the  right  of  proxy  holders  to  exercise  the 
voting rights at their discretion in cases where: 

(a) 

they have a business, family or other relationship with the issuer, 

(b) 

they are a controlling shareholder of the issuer, 

(c) 

they  belong  to  the  management  of  the  issuer  or  of  one  of  its  controlling 
shareholders. 

A  shareholder  may  only  appoint  one  person  to  act  for  him  as  a  proxy  holder  in 
relation to any one general meeting. 

A person acting as a proxy holder may hold a proxy from more than one shareholder 
without  limitation  as  to  the  number  of  shareholders  so  represented.  Where  a  proxy 
holder holds a proxy from several shareholders, he may cast concurrent votes for and 
against  any  resolution  and/or  abstain  from  voting  on  such  resolution  in  accordance 
with the voting instructions of the shareholders the proxy holder represents. 

A  proxy  holder  shall  enjoy  the  same  rights  to  speak  and  ask  questions  in  general 
meetings  as  those  to  which  the  shareholder  it  represents  would  be  entitled,  unless 
instructed otherwise by the shareholder. 

Article 11 
Appointment of proxy holders 

The  appointment  of  a  proxy  holder  and  the  issue  of  voting  instructions  by  the 
shareholder to the proxy holder shall not be subject to any formal requirements, other 
than  such  requirements  as  may  be  strictly  necessary  for  the  identification  of  the 
shareholder and of the proxy holder. 

Proxy  holders  may  be  appointed  by  electronic  means  subject  to  such  requirements, 
other  than  that  of  an  electronic  signature,  as  may  be  strictly  necessary  for  the 
authentication of the appointer and the identification of the proxy holder. 

Requirements  imposed  by  Member  States  under  paragraphs  1  and  2  shall  be 
proportionate to their objectives. 

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1. 

2. 

1. 

2. 

3. 

4. 

5. 

Article 12 
Voting in absentia 

Any  shareholder  of  a  listed  company  shall  have  the  possibility  to  vote  by  post  in 
advance of the general meeting, subject to such requirements as may be necessary to 
ensure the identification of shareholders and are proportionate to this objective. 

Member States shall prohibit requirements and constraints which hinder the exercise 
of voting rights attached to shares by electronic means by shareholders who are not 
physically present at the general meeting, except in so far as such requirements may 
be  necessary  to  ensure  the  identification  of  shareholders  and  the  security  of 
electronic communications and are proportionate to this objective. 

Article 13 
Voting upon instructions 

Member  States  shall  ensure  that  any  natural  person  or  legal  entity  that  under  their 
laws  is  allowed  to  hold  securities  in  the  course  of  a  business  for  the  account  of 
another natural person or legal entity may hold such securities in either individual or 
omnibus accounts. 

Where the shares are held in omnibus accounts, it shall not be permitted to require 
that  they  be  temporarily  registered  in  individual  accounts,  in  order  to  be  able  to 
exercise voting rights attaching to these shares at a general meeting. 

Persons referred to in paragraph 1 shall not be prevented from casting votes attaching 
to  the  shares  which  they  hold  for  the  account  of  another  natural  person  or  legal 
entity, provided they have been instructed to do so by such other person or entity The 
person or entity referred to in paragraph 1 shall keep a record of the instructions for a 
minimum period of one year. 

Where a person or entity referred to in paragraph 1 holds shares of the same issuer in 
an  omnibus  account,  it  shall  be  permitted  to  cast  votes  attaching  to  some  of  the 
shares differently from votes attaching to the other shares. 

By derogation from Article 10(1), third subparagraph, a person or entity referred to 
in  paragraph  1  that  holds  securities  in  an  omnibus  account  shall  have  the  right  to 
issue a proxy to every person on whose behalf it holds shares in such account or to 
any third party designated by that person. 

Article 14 
Counting of votes 

For the purpose of counting votes, all votes cast in relation to any resolution submitted to the 
approval of a general meeting shall be taken into account. 

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1. 

2. 

1. 

Article 15 
Post-General meeting information 

Within  a  period  of  time  which  shall  not  exceed  15  calendar  days  following  the 
general meeting, the issuer shall publish on its Internet site the results of the votes on 
each resolution tabled at the general meeting.  

The  results  of  the  voting  shall  include  for  each  resolution  at  least  the  number  of 
shares  in  respect  of  which  voting  has  taken  place  and  the  percentages  of  votes  in 
favour of and against each resolution. 

CHAPTER III: FINAL PROVISIONS 

Article 16 
Transposition 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions  necessary  to  comply  with  this  Directive  by  [31 December 2007]  at  the 
latest.  They  shall  forthwith  communicate  to  the  Commission  the  text  of  those 
provisions and a correlation table between those provisions and this Directive. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 17 
Amendments 

With effect from the  date specified in  Article 16(1),  Article 17 of Directive 2004/109/EC is 
amended as follows. 

1. 

Paragraph 2 is replaced by the following: 

“2. The issuer shall ensure that all the facilities and information necessary to enable 
holders of shares to exercise their rights are available in the home Member State and 
that the integrity of data is preserved. In particular, 

(i)  the  issuer  shall  designate  as  its  agent  a  financial  institution  through  which 
shareholders may exercise their financial rights; and 

(ii)  he  shall  publish  notices  or  distribute  circulars  concerning  the  allocation  and 
payment  of  dividends  and  the  issue  of  new  shares,  including  information  on  any 
arrangements for allotment, subscription, cancellation or conversion.” 

2. 

In paragraph 4, the words “paragraph 2(c)” are replaced by “paragraph 2, point (i)”. 

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This Directive shall enter into force on the [twentieth] day following that of its publication in 
the Official Journal of the European Union. 

Article 18 

Article 19 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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