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Rights of shareholders

Directive 2007/36/EC on the exercise of certain rights of shareholders in listed companies must be implemented in Europe by August 3 2009. The Austrian Stock Corporation Amendment Act 2009 (ARÄG 2009) is scheduled to enter into force on August 1. It contains significant changes to the Stock Corporation Act (the AktG). This article summarises the core provisions.

Differentiation between listed and non-listed companies: A definition of "listed" companies will be incorporated into section 1 of the AktG. A company is deemed listed if its shares are admitted to trading on a recognised stock exchange within the meaning of section 2/32 of the Austrian Banking Act (BWG). This covers admittance to trading to a stock exchange in Austria or in other EU member states, but also in third countries, provided they meet the criteria of section 2/32 BWG.

Record date: The ARÄG 2009 will abolish share blocking. Share blocking requires notification by the company of the identity of a shareholder and the intention to vote at a certain date prior to a shareholders' meeting. After this date, shares can no longer be traded. Under the ARÄG 2009 the right to participate in a shareholders' meeting will be determined at a particular record date and no longer by a deposit of shares before the shareholders' meeting. The record date is the expiry of the 10th day prior to the date of the meeting. Under the new system, shareholders or their proxies are (only) "validated" for voting on a date prior to the meeting but the shares can still be traded after that date.

Non-listed companies may stick to the old share blocking system but are free to introduce the new record date system.

Invitation to shareholders' meeting: The minimum notice period for an invitation to the ordinary shareholders' meeting is set at 30 days under the ÄRAG 2009, for (extraordinary) shareholders' meetings at 21 days.

Information rights: Under the AktG, shareholder information rights are focused on the right to submit questions during a shareholders' meeting. The ARÄG 2009 puts a stronger focus on upfront information. Proposals for resolutions and supporting information (such as the annual accounts in case of an ordinary shareholders meeting) must be available for inspection by the shareholders (and in case of listed companies, available on their website) three weeks prior to the shareholders' meeting.

Electronic participation: Pursuant to the ARÄG 2009, electronic participation in a shareholders' meeting will be possible by, for example, a "satellite shareholders' meeting", real-time two-way communication (at least acoustically) and by electronic casting of votes.

Electronic casting of votes shall be possible either by email or a special form available from the website of the company. Shareholders must be able to record their objection to a resolution. The articles must establish whether the electronic casting of votes shall be permissible (only) up to a certain point in time prior, prior and during or only during a shareholders' meeting.

Proxies: The ARÄG 2009 will allow shareholders to appoint more than one proxy; this will be practical if parts of the shareholding are deposited with different banks. Voting powers of attorney (PoAs) may now also be issued by email containing an electronic (secure) signature or if the email contains a scan of the executed proxy. Listed companies must in any case accept faxed PoAs. Parties offering to act as voting proxies must disclose potential conflicts of interests. Special rules apply if the company itself or management or supervisory board members solicit PoAs.

Florian Kusznier

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