Brussels, 04/11/2004 (Agence Europe) - The European Commission has proposed a directive that should facilitate changes in company shareholding. It would remove certain obligations concerning capital changes in terms of volume, structure or ownership, fixed by the current Community legislation (2nd directive on corporate law).
Among other things, the proposal brings into line provisions concerning the repurchase or compulsory withdrawal of securities during an increase or reduction of share capital, according to the rules set out by the directive on takeovers, adopted in March. In practice, a shareholder who holds over 90% of a company's share capital may demand that other shareholders sell up their shares at an equitable price, a price that should be fixed "according to relevant national legislation", the Commission's document states. On the other hand, a minority shareholder may demand the repurchase of his/her shares. The proposal states that the Takeover Directive will take precedence where there is a risk of overlapping with provisions of this new proposal.
The new directive is planning to limit or get rid of preferential rights, given the increase in cash contributions in share capital. The Commission is displaying caution but, explained that this amendment would in practice get rid of the "golden share" and other forms of privileged shares but would only apply when allowed by national legislation.
The draft text will also get rid of the rules obliging companies to systematically employ an independent expert to assess cash contributions when a share is not paid in kind. The text explains that it certain cases this obligation does not apply.
The Commission is also proposing to make the threshold more flexible when a company buys back its own shares: the limit will no longer be a 10% threshold of underwritten capital but the amount of reserves for distribution. To this end, the board of directors will have to obtain the authorisation of the general assembly in five years time and not eighteen months, which has been the case hitherto, "to limit the too frequent use of approval procedures by the general assembly", explained the Commission".