Luxembourg, 28 June 2005

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

2. Why facilitate cross-border exercise of shareholders’ rights? Shareholders’ vote is a fundamental of corporate governance • 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 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

3. Non-resident shareholders’ difficulties to vote Practical hurdles • 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 High costs • 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

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

5. Results of first public consultationKey findings Clear support for • 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 Doubts in relation to Definition of ‘ultimate investor’: desirable in principle but difficult to achieve in practice

6. Second public consultation: proposals (Launched 13 May. Closes 15 July) • Minimum standards to enable shareholders to cast informed votes • 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 • Abolition of share blocking • Holder of depositary receipts to control the voting right • New definition of ‘ultimate investor’, based on Unidroit

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