January 19 2009
In response to the EU Directive on the Exercise of Certain Rights of Shareholders in Listed Companies, Parliament recently adopted an important amendment to the Commercial Company Code. Its main purpose is to enhance corporate governance in Polish joint stock companies by strengthening and facilitating the exercise of shareholders' rights. The amendment concerns the convening of shareholders' meetings and introduces modern registration, participation and voting methods. It also proposes:
The main goal of the amendment is to give investors - particularly foreign investors that are focused on public companies - quick and easy access to information on the convening and course of shareholders' meetings, enabling them to exercise their corporate powers. The amendment requires public companies to maintain a website containing details of the shareholders' meeting and all necessary information about the proposed agenda and participation therein. The meeting will also be announced according to the provisions of the Act on Public Offering regarding the publication of current information.
The amendment provides that a public company must inform shareholders via its website of:
The amendment sets forth precise regulations on time limits and filing demands for convening the shareholders' meeting and registration rules for shareholders, users or pledgees authorized to exercise their voting rights. The rules differ depending on whether the company is public or private.
The amendment directly strengthens the position of minority shareholders in joint stock companies. Firstly, shareholders that represent 5% (previously 10%) of the entire share capital of the company will be vested with a right to request the convening of a shareholders' meeting. Secondly, the same proportion of shareholders will have the right to include specific items on the agenda of the meeting and to table, prior to the meeting, draft resolutions for items on the agenda. In a public company drafts may be provided via electronic means and will be posted on the company website. Company statutes may provide for lower percentage threshold requirements.
As well as enhancing the corporate governance rules, the new legislation goes further by providing for completely new methods of participation and voting at shareholders' meetings. A company can now offer its shareholders the option of participating in the meeting electronically. Such participation will be made subject to such requirements and constraints as are necessary to ensure the identification of shareholders, to the extent that these are proportionate to achieving that objective. In addition, in public companies shareholders will be able to vote by correspondence in advance of the meeting.
A shareholder that represents at least half of the share capital or is authorized to exercise at least half of all voting rights in the company will be vested with the rights to convene the shareholders' meeting and appoint its chairman.
The amendment also seeks to encourage passive shareholders by simplifying rules on representation and participation in the meeting through an attorney. The amendment is in line with the directive, according to which member states must abolish provisions for public companies that restrict the eligibility of persons to be appointed as holders of power of attorney. Therefore, with respect to public companies, the amendment eliminates the restriction on management board members or company employees from serving as an attorney at the shareholders' meeting. However, if an officer or employee of the company (or a dependent company) is appointed as attorney at the meeting, such power of attorney will be valid for one meeting only. In addition, the attorney must disclose specified facts that may be relevant to shareholders in assessing any risk of the attorney pursuing an interest other than those of the shareholders.
The draft amendment also allows for split voting, allowing shareholders to vote differently for each share. This is important for attorneys representing several shareholders, as the law will now not prohibit the casting of different votes attached to different shares.
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