Are shareholder proposals permitted and what requirements must be met for shareholders to make a proposal?
Generally, shareholder(s) holding at least 5 % of the share capital of a JST may request adding of new items on the agenda of the shareholder meeting. The motion must contain (i) the formulated agenda item and (ii) the resolution proposal, together with a reasoning. The shareholder(s) may file the motion prior to the publication of the agenda, or afterwards. In the latter case, the motion needs to be filed no less than 21 days (or 19 days in case of an extraordinary shareholder meeting) prior to the shareholder meeting.
In addition to the above, shareholders holding at least 1 % of the share capital of a public company may request adding of additional proposals for resolutions with respect to items on the agenda as published by the management board.
During the shareholder meeting, shareholders may – similar to the management board and the supervisory board – submit motions for resolutions with respect to any item on the agenda.
As a rule, the board of directors is entitled to propose the agenda of the general meeting, submitting to the shareholders a manual for participation. In 2015, CVM enacted a ruling on attendance and distance voting at shareholders’ meetings of publicly held companies, whereby shareholders would be able to present proposals of deliberations to be voted on, and to vote on the deliberations of the shareholders’ meeting, subject to certain requirements. Implementation of this proxy voting system was not mandatory for companies up until 2016, but in 2017 it became mandatory for the major companies listed at B3 and, as from 2018, for all listed corporations.
In addition to the right of any shareholder to raise questions at shareholder meetings (see answer to question 16), shareholders of an SA or SCA holding a required percentage of capital can propose subjects for discussion or decision at shareholder meetings, if they represent a minimum percentage of capital, calculated on a sliding scale from 5% to 0.5%. For example, for a company with €100 million in stated capital, the threshold for proposing agenda items is about 0.8%. Such proposals must be notified to the company at least 25 days prior to the meeting (10 days if a tender offer is in progress). In addition, any shareholder may propose that the meeting decide to remove members of the board of directors or supervisory board.
Shareholders whose combined shares amount to 5% or represent EUR 500,000 of the company’s registered share capital may request that certain items shall be added to the agenda of a shareholder meeting.
The law provides for the following rights/allowances to the minority shareholders of a company:
a) At the request of shareholders, representing one twentieth (1/20) of the paid-up capital, to the board of directors, the board is obliged to convene an extraordinary general meeting of shareholders, setting a date for this meeting, which should not be more than 45 days from the date of the request to the chairman of the board.
b) At the request of shareholders, representing one twentieth (1/20) of the paid-in capital, the board of directors is obliged to include additional items on the agenda of a general meeting already convened if the relevant request is received by the board of directors at least 15 days before the general meeting.
c) In companies with shares listed on a regulated market, shareholders representing one (1/20) of the paid-up capital have the right to submit draft decisions on matters included in the original or any revised agenda of the general meeting.
d) At the request of a shareholder or shareholders representing one twentieth (1/20) of the paid-up capital, the chairman of the meeting shall be obliged to defer once only the decision-making by the general meeting, ordinary or extraordinary, on all or certain matters, day of resumption of the meeting, as specified in the shareholder's request, which may not be more than twenty (20) days from the date of the postponement.
e) At the request of any shareholder submitted to the company at least five full days before the general meeting, the board of directors is required to provide the general meeting with the specific information requested on the company's affairs insofar as they are relevant with the items on the agenda. The obligation to provide information does not exist when the relevant information is already available on the company's website, in particular in the form of questions and answers. Also, at the request of shareholders, representing one twentieth (1/20) of the paid up capital, the board of directors is obliged to announce to the annual general meeting, the sums paid in the last two years to each member of the board of directors or the directors of the company, as well as any benefit to such persons from any cause or contract of the company with them.
f) At the request of shareholders, representing one tenth (1/10) of the paid up capital submitted to the company within the time limit set in paragraph 6, the board of directors shall be required to provide the general meeting with information on the course of corporate affairs and the assets of the company.
g) At the request of shareholders, representing one twentieth (1/20) of the paid-up capital, the voting on a topic or items on the agenda shall be made by open vote.
h) At the request of any shareholder who has been submitted at all times, the board of directors must within twenty (20) days inform the shareholder about the amount of the company's capital, the categories of shares issued and the number of shares in each class, in particular privileged, with the rights granted by each category, as well as any tied shares, both in their number and in the limitations provided. The shareholder will also be entitled to know how many and what shares he owns as they arise from the shareholders' book. This shall not be applicable for companies with shares listed in the regulated market.
It is to be noted that the articles of incorporation may reduce, but not more than half, the percentages of the paid-up capital required to exercise the minority rights described above.
Shareholders of a company have the power to make proposal by way of a written resolution or as a resolution to be moved at general meetings. Section 551 of the Companies Ordinance provides that if a resolution that may properly be moved is proposed by a shareholder as a written resolution, the shareholder may request the company to circulate that resolution with one statement of not more than 1,000 words on the subject matter of the resolution. On the other hand, section 576 of the Companies Ordinance provides that if the shareholder would like a resolution to be moved at the AGM or any general meeting, the shareholder may propose to have the notice of the resolution included in the notice of the AGM or general meeting which is to be given at least 21 days before the AGM, and at least 14 days before any general meetings of a limited company.
Under the CA, qualified shareholders are permitted to make shareholder proposals. To be a qualified shareholder, a shareholder must hold the lesser of one percent of all voting rights or 300 voting rights, and must have continuously held such shareholding for six months or longer. Shareholder proposals have to be made no less than eight weeks before the date of the shareholders' meeting.
In limited and stock companies, shareholder proposals are permitted subject to certain requirements (e.g., in listed companies a 2% stake is required).
Any shareholder who holds at least 3% of the total issued and outstanding shares (in the case of a listed Company, a shareholder who has held at least 1% (or 0.5% in case of a listed Company with at least KRW 100 billion of total paid-in capital) of the total issued and outstanding shares for at least six months, exclusive of non-voting shares, may propose an agenda item six weeks prior to the date of a GMS and such shareholder may explain the subject matters at the meeting. For ordinary general meeting of shareholders (“OGMS”), shareholder proposals must be submitted six weeks prior to the date of the year corresponding to the date of the OGMS in the immediately preceding year.
Individual shareholders or group of shareholders representing shares with a total a par value of at least 1 million Swiss francs or, if lower, 10 per cent of the share capital, may request that an agenda item together with a proposal be included in the invitation. The articles of association may contain a lower threshold and the SCBP states that in case the general meeting of shareholder reduces the par value of shares through repayment, the board of directors should review whether it would be appropriate to adjust the required threshold. In addition, each shareholder may submit a proposal under an existing agenda item directly at the shareholders' meeting.
Shareholder proposals are resolutions proposed by a shareholder to be presented and voted on at a meeting of the company’s shareholders. Shareholder proposals are permitted in the United States, and are frequently submitted on many governance topics (including board declassification and shareholder rights to act by written consent and call special meetings) as well as social topics (such as sustainability reporting, gender pay gaps and board and employment diversity).
In the 2018 proxy season, the overall number of shareholder proposals submitted decreased 5 percent to 788, but the average support for proposals voted on increased by almost 4 percent to 32.7 percent, in part due to increased institutional investor support. In recent years, more shareholder proposals have focused on environmental, social and corporate governance issues, as well as investment policies and practices and corporate strategy and operations.
The SEC has established rules governing the submission and inclusion of shareholder proposals in a company’s proxy materials (Rule 14a-8, promulgated under the Securities Exchange Act of 1934). To be eligible to submit a proposal under Rule 14a-8, a shareholder must satisfy certain minimum share ownership requirements leading up to and through the date of the meeting. In addition, the shareholder must properly submit the proposal to the company within a certain timeframe. The SEC rules require a company to provide submission deadlines, proposal requirements and contact information for submitting a shareholder proposal in the company’s proxy statement for its most recent annual meeting. Once a proposal is properly submitted, the SEC rules require the company to add the proposal to the agenda for the next annual meeting of shareholders, unless the proposal is excludable based on one of thirteen possible bases for exclusion specified in Rule 14a-8. The company has the burden of demonstrating that it is entitled to exclude the proposal. If the proposal is included in the proxy statement, the submitting shareholder or a designated representative must personally present the proposal at the shareholders’ meeting.
Shareholders who do not want to, or are not able to, use the company’s proxy materials may circulate their own proxy statement and proxy card at their own expense. Shareholders must give the company at least 120 days advance notice of their proposal.
Under state law, shareholders also typically have the right to present a shareholder proposal for consideration at a shareholder meeting (rather than including the proposal in the company’s proxy materials) if the advance notice and other requirements of the company’s Charter Documents or operating agreement are met. Shareholders of public companies, however, do not typically make a proposal from the floor since nearly all public company shareholders vote by proxy and the proxy holders (generally members of management) have the right to vote in their discretion on any matter that properly comes before the meeting but is not set forth in the proxy statement.
A company must send out a notice for a meeting within 21 days of a valid request from shareholders holding 5% or more of the total voting rights. That meeting must be held within 28 days of the notice. The request must (inter alia) state the general nature of the business to be dealt with at the meeting, and may include the text of a resolution to be proposed.
In addition, shareholders holding 5% or more of the total voting rights (or at least 100 members each holding on average £100 of paid up capital) can require a resolution or matter to be put before the annual general meeting of a public company. This request must (inter alia) identify the resolution or matter and be received not later than 6 weeks before the relevant annual general meeting (or if later, the time the AGM notice is given). In addition, shareholders meeting this threshold can also require the company to circulate a statement to shareholders relating to matters proposed to be dealt with at a relevant shareholder meeting.
Canadian corporate statutes entitle shareholders to submit proposals describing matters the shareholders wish to raise at shareholder meetings. The CBCA requires that the proposer must have been held shares either equal to 1% of the total number of the outstanding voting shares of the corporation or whose fair market value is at least C$2,000, for at least six months. A proposal may include nominations for the election of directors if the proposer holds shares representing not less than 5% of the shares of a class of shares of the corporation entitled to vote at the meeting. Proposals meeting the requisite criteria must be included by the corporation in the management information circular prepared and submitted to shareholders in advance of the meeting.
Pursuant to and subject to the limitations under Art. 2367 ICC, shareholders holding at least 10% of the corporate capital (or 5% in case the company is listed) shall have the right to request the directors to call a meeting, for the purposes of resolving on specific items.
The same rule applies to quotaholders holding at least 1/3 of the corporate capital.
As regard listed companies, Art. 126-bis CFA grants the shareholders representing at least 2.5% of the corporate capital with the right to request the directors to supplement the agenda of an already-called meeting.