Golden shares under siege

BRUSSELS (Reuters) – The European Commission waded further into the politically charged «one-share, one-vote» debate yesterday by unveiling a research project that may pave the way to changes in how companies are run. The notion of each share in a company being treated equally when it comes to totting up votes on mergers and other big issues is not applied across the board in all of the European Union’s member states. Some listed companies are effectively still controlled by their founding families due to special rights their shares have over outside shareholders. The Commission has already taken Germany to the European Court of Justice to try and end the state of Lower Saxony’s «golden share» in Volkswagen. The EU’s executive arm said yesterday it has commissioned a report to look into the proportionality between ownership of a company and its control. The aim is to have solid data to back any initiatives Brussels may take. «The study represents the essential starting point for any further discussion on the adequacy of control to capital,» EU Internal Market Commissioner Charlie McCreevy said in a statement. The study will be conducted by Institutional Shareholder Services, a consultancy, with law firm Shearman and Sterling and the European Corporate Governance Institute. McCreevy has suggested any action could be in the form of a «recommendation» for good practice, rather than mandatory rules. ISS will profile the corporate structure of 450 companies in 16 member states, give an overview of what is happening outside the block, and include the latest academic research. A previous study conducted last year by Deminor Rating, now part of ISS, concluded that 38 percent of the top 300 listed corporations in Europe did not have one share, one vote. In Sweden, some companies have two classes of shares, A and B, with radically different voting rights, while France has double voting rights for long-term shareholders. In some Dutch companies, ownership rights are separate from voting rights.