Phitrust, advised and supported by Proxinvest, writes another milestone on institutional investors engagement in a prestigious group of ten truly engaged institutions RailPen, Aviva Investors (UK), PGGM (NL), CalPERS (US), AMUNDI, CPR AM, DNCA Finance, Edmond de Rothschild AM, OFI, Phitrust (France).
This resolution is part of the debate opened by the so-called French “Florange law” of 29 March 2014 which made the double voting right the common legal system for registered shares of listed companies. However, this law does allow company by-laws to depart from these provisions by voting on a specific resolution during a 2015 shareholders’ meeting enabling the provisions relating to single voting rights to be maintained, restoring the “one share-one vote” principle.
The double voting rights does not meet the exact proportionality between capital invested by a shareholder and the voting rights available to him; in addition, obtaining double voting rights requires registration of shares, which involves an administrative burden that is too high or impossible to manage for a foreign investor or UCITS mutual fund, and consequently leads to an imbalance in shareholder rights. Contrary to the intention of the law – that PhiTrust Active Investors and many shareholders share – that would encourage long-term investment, one can only note that the rights as provided by “Florange law”, does not facilitate a longer detention of the shares. The recent history of several major public companies in France means recognizing that double voting rights are only of interest to investors attempting to exercise control over a company.