New rules to increase shareholders' rights

TÁNAISTE AND Minister for Enterprise, Trade and Employment Mary Coughlan will today sign into Irish law a European directive that should make it easier for shareholders of stock market companies to hold management to account and have their say about the way the businesses are run.

The Shareholders’ Rights (Directive 2007/36/EC) Regulations 2009 introduces new rights for investors and aims to provide for more timely access to company information.

The new rules promote the use of simplified electronic or internet-based means for shareholders to vote at general meetings of publicly-listed companies. The Tánaiste said they would assist in increasing shareholders’ “understanding, activism and engagement” with the companies they own.

The new rules will provide for shareholder participation across borders without the need to physically attend meetings by exercising voting rights electronically.

Companies will also be obliged to answer shareholders’ questions at general meetings and to publish information regarding a meeting on their website, including the result of votes.

Shareholders representing at least 5 per cent of the voting shares will be able to call a general meeting. Previously, a holding of 10 per cent was required. Shareholders with at least 3 per cent of the voting rights will have the right to put items on the agenda and table draft resolutions.

There will be a minimum notice of 21 days for most general meetings, which can be reduced to 14 days for extraordinary general meetings.

The rules also strengthen shareholders’ rights in relation to the appointment of proxies.

The regulations will apply to companies that have their registered office in Ireland and whose shares are admitted to trading on a regulated market operating in an EU state.

The directive must be implemented in EU states this month.