COMPANY LAW: NEW DRAFT DIRECTIVE SEEKS TO STRENGTHEN SHAREHOLDERS' RIGHTS.

Article 17 of the 2004 Transparency Directive requires issuers to make available certain information and documents which are relevant to annual general meetings. However, the Commission points out that "such information and documents are to be made available only in the issuer's home member state". Article 17 does not mention when and how these are to be made available. Worse still, the Commission feels the extension of the Internal Market has further complicated the system and aggravated the problem. Particularly, as Charlie McCreevy pointed out on January 10, since a third of company shares in the EU are now held by foreign shareholders. In certain sectors, this proportion is even as high as 70%.

The new Directive therefore proposes to fill certain loopholes by:

- 1. ensuring that all general meetings of shareholders are convened sufficiently in advance and that all documents to be submitted to the 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. The period proposed is thirty days.

- 2. abolishing all forms of share-blocking. According to the Commission, Poland, the Czech Republic and Greece notably prevent shareholders from selling shares in the immediate run-up to an annual general meeting. The new text will ban such practices and propose replacing them with a record date system to determine the entitlement of a shareholder to participate and vote in a general meeting. Problem: this provision would permit shareholders who have just sold all their shares to nevertheless attend an AGM. However, the Commission feels the risk remains low, particularly if the record date is close to the date of the general assembly.

- 3. removing all legal obstacles to electronic participation in general meetings. However, recognising that technology is not advanced enough to permit active electronic participation in all cases with a...