10 September 2010

EuropeanIssuers: Market standards on general meetings endorsed

Over the last four years, companies, investors, banks and market infrastructure providers have worked together to make it easier for investors to participate in shareholder meetings across borders. This initiative, sponsored by the European Commission, recently resulted in a set of market standards for cross-border communications and operations.

The standards are built on three pillars:
1) standardised messaging to facilitate speedy communication with the end investor;
2) definition of entitlement to vote; and
3) a mechanism for casting votes ahead of the meeting.

While foreign ownership of shares continues to grow, the exercise of corporate rights, in particular the right to vote at the general meeting, is too often hampered by technical and legal barriers. Difficulties in accessing information, for instance, are believed to be an important impediment. When an investor decides to buy and hold foreign shares, a chain of financial intermediaries intervenes in the process, each of them operating in different markets with different rules, customs and practices. The standards bring a practical solution by harmonising and streamlining the way in which the parties in the chain communicate: Who should communicate What, When and How. Since in most cases the company has no means of knowing who the end investor is, it has to rely on the chain of intermediaries for communication purposes.

The industry working group, chaired by Markus Kaum of Munich Re on behalf of EuropeanIssuers, is composed of delegates from the main European associations representing, Registrars (Institute of Chartered Secretaries and Administrators - Registrars Group), Central Securities Depositories (ECSDA), Intermediaries (EBF, ESBG, EACB and AFME), Stock Exchanges (FESE) and Investors (Euroshareholders, the Association of British Insurers and the UK Institutional Shareholder Committee).

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