Slide 1 Luxembourg, 28 June 2005 FACILITATING THE CROSS-BORDER EXERCISE OF SHAREHOLDERS’ RIGHTS Second European Corporate Governance Conference Pierre Delsaux European Commission

Slide 2 Why facilitate cross-border exercise of shareholders’ rights? Boards are accountable to shareholders who exercise control through vote  voting process must be simple, effective and efficient General Meetings have extensive powers On-going dialogue between board and shareholders must be promoted Shareholders’ vote is a fundamental of corporate governance Non-resident shareholders at a disadvantage Non-resident shareholders account for 1/3 of holdings in large markets and up to 70-80% in smaller markets National provisions governing GMs do not take into account the specific difficulties of non-resident shareholders Non-resident shareholders deterred by cost and complexity of cross- border voting

Slide 3 Share blocking  disincentive to vote Late access to often incomplete information  difficulty / impossibility to cast informed vote Insufficient time to cast vote  votes not taken into account Administrative constraints  difficulty to appoint proxies and vote at a distance Non-resident shareholders’ difficulties to vote Practical hurdles Evidence gathered so far by the Commission shows that cost of cross-border voting results to a large extent from share blocking and the complexities of distance voting High costs

Slide 4 Results of first public consultation (3Q2004) 146 responses from broad range of interested parties, including many national, EU and international associations from 20 countries, including 18 Member States Global support for an EU initiative introducing minimum standards facilitating the exercise of shareholders’ rights Support for a directive but should lay down principles rather than detailed rules

Slide 5 Results of first public consultation Key findings Scope limited to listed companies Abolition of share blocking and replacement by a record date close to GM Holders of depositary receipts to hold voting rights relating to underlying shares Minimum standards for –disclosure of GM notices and material, and their dissemination –rights to ask questions, add proposals and put resolutions forward All issuers to offer means to vote in absentia Simplification of proxy voting rules Systematic dissemination of GM results and minutes Clear support for Doubts in relation to Definition of ‘ultimate investor’: desirable in principle but difficult to achieve in practice

Slide 6 Second public consultation: proposals (Launched 13 May. Closes 15 July) Give early access to complete information  Minimum notice period for GMs & availability of GM documents, resolutions and voting material. Information on issuers’ websites Enable non-residents to cast their vote easily  by correspondence, by proxy (simplified), by instructing financial intermediary Promote active GM participation  Possibility to ask questions at a distance, and more possibility to put items on the agenda and table resolutions Inform shareholders of voting results  Obligation on issuers to disseminate results of GM votes  Minimum standards to enable shareholders to cast informed votes  Abolition of share blocking  Holder of depositary receipts to control the voting right  New definition of ‘ultimate investor’, based on Unidroit

Slide 7 Next steps Report on the second public consultation expected early September Decision on whether to make a proposal, and if so, on the type of instrument will depend on consultation results and impact assessment Any proposal, if any, to be expected at the end of 2005