What is the role of shareholders in electing the governing body?

Corporate Governance

Austria Small Flag Austria

Unless the articles of association provide certain shareholders with nomination rights or provide for an increased quorum, the members of the supervisory board are elected by the shareholders' meeting with simple majority. See question 6.

As stated above, members of the management board are appointed by the supervisory board for a term of 5 years. The appointment may be revoked by the supervisory board during the term for good cause, whereby, among others, the rescission of confidence by the shareholders' meeting (provided the respective resolution was based on objective considerations) may serve as a good cause.

Brazil Small Flag Brazil

Please refer to our comments on item 6.

France Small Flag France

See answer to question 6.

Germany Small Flag Germany

Shareholders are responsible for electing Supervisory Board members in shareholder meetings.

Greece Small Flag Greece

The Law provides that unless otherwise specified by law, the board of directors is elected by the general meeting of the shareholders. For more information please refer to the answer of question No. 6 above.

Hong Kong Small Flag Hong Kong

Please refer to Question 6 of this Guide.

Japan Small Flag Japan

Generally, shareholders may exercise voting rights to elect the governing body of the company as they wish.

Regarding institutional investors, however, based on the SSC, they are expected to exercise their voting rights with the aim of promoting sustainable growth of investee companies.

Portugal Small Flag Portugal

Shareholders play a pivotal role by presenting and voting proposals at the general meeting for the election of corporate bodies (or ratifying co-opted members appointed in case of a vacancy). Minority shareholders may also be entitled to elect a certain number of members of the board of directors or of the supervisory board (mandatory right in listed companies, to be detailed in the by-laws).

South Korea Small Flag South Korea

Please refer to our comments in Item 6.

Switzerland Small Flag Switzerland

The general meeting of shareholders is responsible for the election of the members of the board of directors, usually upon proposal of the board of directors (see question 6 above).

United States Small Flag United States

Shareholders are entitled to elect the board, although a nominating committee or entity of the company is typically responsible for selecting and nominating directors for election by shareholders. A shareholder who disagrees with the board’s strategic direction and management of the company may nominate an alternative slate of director nominees to try to install its own board members and take control of the board. In a contested director election, the company and the activist shareholder compete for the proxy votes of the other shareholders.

Generally, a company’s bylaws establish requirements for director elections. Directors are typically elected by a majority voting standard or a plurality voting standard. Under a majority voting standard, each director must receive the support of more than 50 percent of the shares voting or present at the meeting. Under a plurality voting standard, a director only needs to receive more votes than a competing candidate to be elected, even if he or she does not get a majority vote.

Directors may be elected on an annual or staggered basis. A staggered board of directors, or “classified” board, has separate “classes” of directors who are elected for multiple-year terms, with one class coming up for re-election each year.

United Kingdom Small Flag United Kingdom

Members of the board would typically be elected by the board, with the nomination committee taking the lead on appointments. In a listed company, appointments made by the board would typically need to be confirmed by shareholders at the next annual general meeting, and directors would be subject to re-election by shareholders on an annual basis.

Canada Small Flag Canada

Through voting, shareholders control the composition of the board of directors. Shareholders also have the ability to nominate directors for election through the preparation and mailing of a dissident proxy circular, exempt solicitation, shareholder proposal or floor nomination, depending on meeting eligibility criteria in certain situations.

Majority voting requirements provide that each director of a TSX-listed corporation must tender their resignation to the board if not elected by a majority of the votes cast with respect to his or her election, other than at contested meetings.

Italy Small Flag Italy

See point 6 above.

Turkey Small Flag Turkey

The shareholders have exclusive and non-transferable authority to appoint the board members.

Luxembourg Small Flag Luxembourg

The shareholders have the authority to appoint the managers of a SàRL and the directors of a (single tie system) SA. Where a directorship filled by the general meeting of shareholders becomes vacant, the remaining directors thus appointed may temporarily fill the vacancy unless the articles of association provide otherwise.

Ukraine Small Flag Ukraine

Shareholders elect the supervisory board at the GM, normally by cumulative voting through ballot. Any shareholder may propose his/her own candidate(s) for election subject to the reservation outlined in question 21 above.

Australia Small Flag Australia

The Corporations Act (and usually the constitution of a company) provides for appointment of directors by a majority vote of the shareholders or a decision of the existing directors (which must be subsequently confirmed by majority shareholder vote).

Egypt Small Flag Egypt

The OGM has the sole authority to appoint the board members.

Moreover, regarding the nomination of the board of directors, the general rule is that the parties can agree on a mechanism for the nomination. However, according to the Companies’ Law and the recent decrees of the FRA for the listed companies and the companies operating in non-banking financial activities, cumulative voting for board members shall be included in the company articles of association while the proportional representation is optional and without a minimum level or a particular formula.

Updated: September 18, 2019